Khazanah Nasional Berhad, the strategic investment fund of the Malaysian government, is looking to invest in the Indian arm of Pepe Jeans, two people close to the development said. The fund has already held a few rounds of exploratory discussions with the company’s executives in India.
Khazanah joins The Carlyle Group, Advent International and General Atlantic to acquire a stake in Pepe Jeans. Mint had reported on 24 April that the three US-based private equity funds were shortlisted to acquire a controlling stake in the Indian arm of Pepe Jeans.
“Khazanah is looking to pick up a minority stake as of now. A few rounds of discussions have been held with the company, but a nod from the investment committee is yet to be received,” said the first of the three people, all of whom spoke on the condition of anonymity. It could not be ascertained immediately if Advent, Carlyle and GA were still in the fray.
A message sent to Kavindra Mishra, chief executive at Pepe Jeans India, was not answered. A Khazanah spokesperson declined to comment.
The second person cited above said the valuation is still being negotiated between Khazanah and Pepe. Earlier, the branded apparel group was seeking a valuation of ₹2,000 crore for its business in India. Pepe Jeans India is a wholly-owned subsidiary of Pepe Jeans Group headquartered in Barcelona, Spain. The company was originally founded by three Indians, Arun, Nitin and Milan Shah, in London in 1973 as a weekend stall denim brand.
In February 2015, L Capital Asia, now L Catterton Asia, and Lebanese investment firm M1 Group had acquired a majority stake in Pepe Jeans Group from Torreal SA, Artá Capital and L Capital Europe. The group includes Pepe Jeans London, which accounts for 70% of group sales, and the Hackett brand, which accounts for the remaining business. In India, the firm has a tie-up with Aditya Birla Group for retailing the Hackett brand of premium clothing. L Catterton Asia is the Asian private equity fund of luxury brands group Moet Hennessy Louis Vuitton SA (LVMH). It has been looking to exit its stake in Pepe Jeans, globally.
Pepe Jeans in India has over 215 franchise stores and retails its branded apparel through 1,000 multi-brand stores in the country. For fiscal year 2017, the firm posted net of ₹49 crore and sales of ₹424 crore, according to filings with Registrar of Companies.
Private equity firms have been showing a lot of interest in apparel firms in India. For instance, in May, L Catterton Asia announced that it will be buying 10% in Kishore Biyani’s Future Lifestyle Fashion. In the same month, Kedaara Capital announced that it will be acquiring Vishal Mega Mart Pvt. Ltd. In 2017, Kedaara had also invested in Vedant Fashions, which owns the Manyavar brand.
PE firm Multiples Alternate Asset Management Pvt. Ltd in 2016 had bought a stake in Arvind Fashions, the branded apparel business of Arvind Ltd.
