Indian kidswear brand Lilliput which is indebted of about Rs 750 crore (US$150 million) is likely to be rescued by LVMH’s private equity arm L Capital.
Lilliput, which is 55 per cent owned by founder Sanjeev Narula and 45 per cent by private equity investors Bain Capital and TPG, had undergone a sales slump leading to its being put up for sale.
“I have no option but to sell,” said Narula. “The company can’t service the debt any more.”
According to Indian news media reports, lenders refused to extend further credit citing disagreements between the chain’s founders and investors. That led Lilliput to offer 30 per cent discounts across all stores to drive more sales and meet daily cash requirements.
Lilliput is also being wooed by other companies including India Value Fund, Mahindra & Mahindra and private equity house Kohlberg Kravis Roberts. However, senior officials knowledgeable on the negotiations pick Lilliput’s deal with L Capital as the most likely outcome.
“Top management employees are being interviewed by L Capital and later this week, more interviews are likely with regional staff. It is still not clear if L Capital will even buy out Narula’s original businesses of garment manufacturing and exports. Those negotiations are under way,” said another official.
If L Capital secures the business, Lilliput will join other Indian companies including Fabindia and Genesis Luxury Fashion in its portfolio. The kidswear brand started business in 1991 as a supplier to retailers, before establishing its first store in 2003. It now has 275 stores across the country.