Apparel companies opt for IPOs

Friday, 08 October 2010

Private equity investments and initial public offerings seem to be the flavour of the season among niche mid-cap apparel retailers that are scouting for funds to scale up operations. Retailers such as Cantabil, The Loot, and Gini and Jony are going public while many others such as Catmoss and Lilliput have already diluted stake to PE investors to fund expansions and improve footprint nationally.

The Loot will be filing its draft red-herring prospectus by December and might offload between 25 and 40 per cent stake through the IPO. The company is mulling raising close to Rs 100 crores. The funds will be utilized for expansion, upgradation of warehouses and processing units. Kidswear brand Gini & Jony is mulling raising about Rs 125 crores through its IPO which is slated to hit the bourses by October, while Cantabil Retail IPO recently has been oversubscribed by 2.5 times while it was aimed to raise Rs 105 crores through its public offerings.

More and more companies are coming out with IPOs or additional offers. And these issues have generated huge interest among investors and raised thousands of crores. Practically all such issues have been hugely oversubscribed. And most of them have given huge listing gains to investors. One good thing about the IPO market vis-à-vis earlier times has been that most of them have been from good companies and at reasonable prices. This trend, however, seems to be tapering off and we are increasingly seeing public issues from relatively not so known companies and at fairly stretched prices.

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