Fabindia Files DRHP with SEBI of Rs.4,000 Cr IPO

One of India’s largest and most comprehensive retailer of ethnic brands, Fabindia, has filed its draft red herring prospectus (DRHP) with SEBI for its proposed IPO. The IPO will comprise of a fresh issue of Rs.500 crore and an offer for sale of 250.51 lakh shares by the existing promoters and early investors in the company.

While the pricing of the issue is yet to be decided, the overall OFS is expected to be around Rs.3,500 crore taking the total size of the Fabindia IPO to Rs.4,000 crore. Azim Premji’s family office, Premji Invest is among the early investors in Fabindia. The IPO is expected to value Fabindia at an enterprise valuation of Rs.20,000 crore or a tad under $3 billion.

The promoter Bissell family is planning to gift about 7.75 lakh shares to farmers and artisans who have contributed immensely to the growth of Fabindia. This will be gifted to them out of their stake. Apart from the Bissell family, other investors participating in the offer for sale include Premji Invest, Bajaj Holdings, Kotak India Advantage, among others.

Fabindia has a pedigree of nearly 60 years and it operates through more than 300 branded Fabindia outlets and over 70 dedicated outlets of Organic India. While Fabindia directly sources from over 2,200 farmers across the length and breadth of India, its total farmer impact extends to over 10,300 farmers; many of them through associates.

There has been a strong demand for the IPO of retailers as was evident in the recent IPOs of similar retail based companies. The IPO of Go Fashion had received a good response in the IPO. Another competitor of Fabindia, Biba, is also planning to file for its IPO shortly. Incidentally, Biba is backed by PE investors; Faering Capital and Warburg Pincus.

Ironically, the Fabindia IPO comes at a time when retailers are having a tough time keeping their stores open amidst the pandemic. The third wave of the pandemic has again resulted in several shutdowns impacting footfalls in a big way. The last 2 years has been challenging for most retail outlets with falling sales traction and rising costs.

Fabindia is based out of New Delhi but has a pan-India presence and also a very strong brand recall when it comes to ethnic Indian products, apparel and handicrafts. It is well integrated with farmers and artisans at the back end and retail markets in the front end. The issue will be lead managed by ICICI Securities, Credit Suisse, JP Morgan, Nomura Financial Advisory, SBI Capital Markets and Equirus India.

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