Korean retail major E-Land eyes Spykar acquisition

South Korean retail major E-Land Group and private

equity firm India Value Fund (IVF) are said to have signed non-binding agreements to acquire controlling stake in home-grown denim brand Spykar Lifestyle. Earlier it was reported that Spencer’s Retail, Flagship Company of RP-Sanjiv Goenka Group had joined the race to acquire the biggest domestic denim player.

The 2003-formed PE fund manager had begun talks with various investment bankers for giving a sell mandate. The Avigo is also looking for an enterprise value of Rs 350-400 crores for Spykar. Last year, Avigo had taken over reins from the promoter after roping in its global investor, Metmin Investments, to acquire 30 per cent stake in Spykar by pumping in Rs 30 crore. Metmin Investments is owned by NRI tycoon Raj Bagri, who was the chairman of London Metal Exchange. In 2007, Avigo had invested about Rs 25 crores in Spykar.

Spykar, a known name in denim and casual wear was established by Prasad Pabrekar in 1992. Currently, Pabrekar holds 40 per cent in the company. Spykar makes casual wear and accessories for men and women. Spykar products are sold through 1,000 multi-brand outlets and 198 exclusive brand outlets across the country.

Sources say, apart from the RP-Sanjiv Goenka group, Aditya Birla Group was also in discussions for acquiring the deal to expand its retail brand portfolio. Apart from these two companies, two PE funds, Everstone Capital and India Value Fund Advisors, have also shown their interest in Avigo’s stake.

E-Land operates almost 50 brands across Korea, China, US, England and Italy. In 2006, it had bought out the South Korean operations of French retail giant Carrefour which it later sold to Tesco. The Seoul-based retailer has made several acquisitions outside of Korea over the past few years like the Italian fashion brand, Coccinell. Spykar, on the other hand has a strong distribution network with 1,350 points of sales, including 250 standalone stores most of which are franchised. The retailer is expected to report store sales, which are derived from retail prices, of over Rs 300 crores for financial year 2013. The company has about Rs 52 crores debt on its books down from Rs 147 crores over the previous year.