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Tatas considering acquisition of stake in Fabindia’s clothing division



Tatas in talks to buy stake in Fabindia’s apparel line

The Tata group is reportedly in talks with the promoters and shareholders of Fabindia for a stake or outright purchase of the ethnic apparel business, sources have revealed. The potential acquisition is expected to be valued lower than the $2.5 billion estimated during Fabindia’s failed initial public offering.

If the deal goes through, it could mark one of the largest acquisitions in the segment, following Aditya Birla Fashion Retail’s acquisition of a controlling stake in TCNS Clothing last year. The Tata group sees this as a strategic addition to their portfolio in the ethnic wear space, aligning with Fabindia’s focus on traditional techniques and sustainably sourced fabrics.

Fabindia, seeking funds to reduce debt and expand capacity, had planned to raise capital through the IPO, offering an exit opportunity for investors like Premji Invest and Bajaj Holdings. However, following the IPO withdrawal last year, Fabindia has been exploring other options, including the recent sale of subsidiary Organic India to Tata Consumer Products.

Despite reporting revenue growth in recent years, Fabindia has been facing challenges due to increased competition and changing consumer preferences. The company has been making losses and struggling to appeal to younger demographics. Following the IPO setback, Fabindia underwent management changes and continues to focus on its core offerings of premium ethnic apparel and lifestyle products.

Tata group and Fabindia have not confirmed the ongoing talks, but industry sources suggest that the acquisition could reshape the landscape of the ethnic apparel market. Stay tuned for more updates on this developing story.

Published on April 17, 2024.

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