L Capital in race to acquire Lilliput Kids

Debt ridden Lilliput, the largest kids’ wear chain in

India is up for sale and according to sources, L Capital, the private equity (PE) arm of LVMH, the world’s largest luxury goods group is racing to acquire Lilliput’s retail assets, brand and liabilities. Recently, Lilliput founder Sanjeev Narula and estranged PE investors Bain Capital and TPG had announced plans to sell off Lilliput after it was left with no option to deal with the debt pressure of Rs 750 crores.

The legal spat between Narula and the PE investors further made sure that company’s earlier plans of raising fund through equity or even additional bank financing became extremely tough. After lenders refused to release the sanctioned loan amount of Rs 200 crores because of the battle, Lilliput had to prolong its discount period by offering continuous 30 per cent discounts at all stores to meet daily operational costs.

There are four contenders vying for the deal including L Capital, Mahindra & Mahindra, India Value Fund (IVF) and Kohlberg Kravis Roberts & Co (KKR), who have signed non-disclosure agreements to enter into negotiations to buy Lilliput. But, L Capital’s negotiations are said to have reached an advanced stage.

L Capital Asia launched a $640-million fund last year targeting emerging economies, including China and India. The Asia fund is the fourth fund by L Capital, whose best known investments include Pepe Jeans, Gant and Princess Yachts. The French fund recently picked up 8 per cent stake in Fabindia and had last year bought 25.5 per cent stake in Genesis Luxury Fashion, which distributes global luxury brands, mainly apparel and accessories.