After Lilliput Kidswear announced its plans to sell off the
company because of a fall out with PE investors TPG and Bain Capital, the second largest Indian kids’ wear brand Gini & Jony too is looking for stake sale. The buzz is that investors, including Anil Ambani's Reliance Capital are looking to make an exit from the company that went through a corporate debt restructuring (CDR) last year. Interestingly, while on one hand the government is pondering over how to increase foreign direct investment in the organised retail sector, leading domestic companies are increasingly suffering from debt pressures and differences with their investors.
Sources say, strategic buyers such as Arvind and Madura Fashion & Lifestyle were approached with a proposal to offload 70 per cent stake for Rs 350 crores but these talks did not yield results due to a valuation mismatch. On the other hand, even PE investors are not showing interest in the sector following the recent collapse of Lilliput Kidswear and Avigo Capital Partners's troubled buyout of Spykar Jeans.
While Reliance Capital holds 22 per cent stake in Gini & Jony, Singapore-based fund Arisaig Partners has a 9 per cent share in the retail chain. The remaining shares are with the Lakhani family, which is looking at raising funds and not exiting the company. Gini & Jony has a retail turnover of Rs 300 crores.
The Mumbai-based retailer is the second-largest brand after Lilliput in the Rs 33,000 crores Indian kids’ wear market. Gini & Jony along with Lilliput, Catmoss and a few others occupy the mid-tier segment which accounts for more than 30 per cent of the Indian kids’ wear market, according to retail consultancy firm Technopak’s recent report.
Founded by the Lakhani family, the retailer opened its first brand store in 1996 in Hyderabad. Gini & Jony has 262 exclusive brand outlets, most of which are being run through franchisee agreements. It closed 25 unviable stores last year. Gini & Jony's search for a deal comes at a time when apparel retailers like Spykar, Koutons and Lilliput are already scouting for takers.