Aditya Birla Fashion and Retail Ltd has entered into an agreement to acquire a 51% stake in designer brand Sabyasachi Couture, the former said in a statement on Wednesday evening.
Aditya Birla Fashion is paying Rs 398 crore ($54 million) for the stake. The deal, expected to close in 30-45 days, is subject to statutory approvals and signing of definitive agreements, the statement said.
“We believe that, over the next few years, ethnic wear is going to be an increasingly important category as young and confident Indians rediscover their culture and heritage,” Ashish Dikshit, managing director, Aditya Birla Fashion, said.
Sabyasachi reported a revenue of Rs 274 crore for 2019-20, Rs 253 crore for 2018-19 and Rs 209 crore for 2017-18, the companies said.
Sabyasachi will “add significant weight” to Aditya Birla Fashion’s ethnic wear portfolio. In branded ethnic wear, the fashion and retail firm has previously made investments in Jaypore and Shantanu & Nikhil.
This latest acquisition will accelerate the company’s strategy of capturing a larger share of the ethnic wear market across key consumer segments, usage occasions and geographies, Aditya Birla Fashion said.
“Over the next few years, Aditya Birla Fashion intends to craft a portfolio that addresses the entire gamut of ethnic wear segments: value, premium and luxury,” Dikshit added.
EY, PWC and Shardul Amarchand Mangaldas & Co were the transaction advisers for Sabyasachi; Aditya Birla Fashion was advised by KPMG, Khaitan & Co and Transaction Square LLP.
Incorporated in 1990, Sabyasachi Couture is engaged in the business of manufacturing, distribution and sale of designer apparels and jewellery and accessories under the brand Sabyasachi for both men and women.
Aditya Birla Fashion has brands such as Louis Pillippe, Van Heusen, Allen Solly, and Peter England.
It acquired a controlling stake in another retail brand Pantaloons from the Future Group in 2012 for Rs 1,600 crore.
Aditya Birla Fashion reported a revenue of Rs 8,788 crore for 2019-20.
Last year, it had raised Rs 1,500 crore from ecommerce major Flipkart. It had said then that the capital would be used to scale further growth in segments such as athleisure, innerwear, and ethnic wear.
Not too many deals have been reported in the ethnic wear segment in the recent past.
In 2019, Mumbai-based private investment firm Alpha Capital invested Rs 80 crore ($11.5 million) in women’s ethnic and casual wear label Shree.
In the past, women’s apparel brands have raised private equity funding, such as Biba (Warburg Pincus and Faering Capital), AND (General Atlantic) and W (TA Associates).
