Fabindia Sets IPO to Help Boost Supply Chain

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NEW DELHI — Setting a route that only a limited number of Indian fashion and lifestyle retailers have taken, Fabindia has filed its papers for an initial public offering. The retailer has more than 300 stores in India and more than a dozen internationally.

Fabindia plans to use the funds raised to boost its supply chain.

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In its filing, Fabindia also emphasized its work in “enabling and uplifting” those associated with company and making a “long and lasting positive impact,” revealing plans to transfer around 400,000 shares to artisans and 375,000 shares to farmers engaged with the firm or its subsidiaries “as a reward” and “to express gratitude.”

“There are very few in this space in the country to start with, the timing is good for them,” Arvind Singhal, chairman of Technopak, a retail consultancy, told WWD. “There is a strong headroom for all the players, it’s not a zero-sum market in India, like it has been in the U.S., and the overall space is large enough to keep adding more players. Because there is an overall positive and high growth rate of private consumption.”

Although the third COVID-19 wave has been sweeping through India over the last few weeks, resulting in some store closures, curtailed opening times and, in New Delhi, curfews on the weekends, consumer sentiment has been bouncing back over the past year. The Indian apparel market was worth an estimated $55 billion in 2021 and, with growth of 10 to 12 percent a year, is expected to be close to $95 billion by 2025. Apparel has been one of the fastest-growing segments of the $850 billion Indian retail market.

Fabindia has been a consistent market player since its first retail store opened in 1976 — the company itself was formed in 1960 by John Bissel, an American working for the Ford Foundation in New Delhi.

Over the past decade, Fabindia has been opening new stores and launching new retail concepts while maintaining its strength in ethnic retail, and growing brand recognition.

“We’ve become very good at launching franchises. We now need to become good at scaling. So that’s our next challenge,” William Bissell, managing director of Fabindia Overseas Pvt Ltd., who has been carrying forward his father’s vision, told WWD when the first new concept experience store was launched in Vasant Kunj, in New Delhi, in March 2017. This was the company’s first launch of a department store-like concept, offering more than 280,000 stock keeping units.

Fabindia has been open to investment and growth in various ways: L Capital, which was the-then venture capital arm of French multinational LVMH Moët Hennessy Louis Vuitton, invested in the retailer in 2012 when it was valued at about 18.75 billion rupees, or $281.2 million. L Capital exited its investment in 2016, when Fabindia was valued at more than double, about 45 billion rupees, or $675 million. Venture capital firm Premji Invest, which was already an investor, took over L Capital’s 8 percent stake.

There has also been diversification across categories — including more Western wear, accessories, home textiles and furnishings, furniture, organic beauty and home products, and Fabcafe.

Noting its history and brand recognition, Singhal noted that the market has become increasingly diverse and fast moving, making the space far more competitive, and suggesting the need for caution.

“Let me put one disclaimer: Lifestyle brands need to keep periodically refreshing and reinventing, otherwise consumers may remember you as a brand — but may not necessarily spend their rupees or dollars on you. In that context, Fabindia has tried to do multiple refresh and reinventions and diversifications. I’m not very convinced or sure that all of that has worked. If you look at topline and profitability in the last three years, it does not seem to reflect this either,” he said.

However, other analysts believe this may well be the time that consumers are more open to experimentation. In 2021, despite the impact of the pandemic, more than 60 companies filed for IPOs last year, including Go Colours in the fashion retail space, which listed at a 90 percent premium on its issue price in November. That listing appears to have set off a confidence trail: Vedant Fashions Ltd., which owns ethnic wear brand Manyavar, will see its shares start trading on Feb. 4, and ethnic wear retailer Biba Apparel is expected to file shortly as well.

A common element for these lifestyle retailers appears to be a private equity investor: Sequoia Capital for Go Colors, Kedaara Capital for Vedant Fashions, and Warburg Pincus and Faering Capital for Biba Apparels.

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