JOHN Bissell's export house of 1958 â€“ better known as Fabindia today
â€“has an unusual backer. Former World Bank president James Wolfensohn's
private investment fund has picked up 6% stake in the country's marquee
Indian ethnic wear company for $11 million. This puts the valuation of
Fabindia at around Rs 750 crore.
Confirming the move Fabindia director Sunil Chainani said: "We were approached by many investors, however, we were keen to choose an investor who shared our values and vision.''
Even though the Indian government does not allow foreign investment in multibrand retail, the policy was partially relaxed recently and FDI up to 51% allowed in single brand retail. Following this, several luxury brands such LVMH, Chritian Dior and Hermes began converting their franchisee agreements into joint ventures.
However, in Fabindia, WCP Mauritius Holding (the investment vehicle promoted by Wolfensohn & Company LLC) has taken a minority stake and there is no clause which allows WCP to hike its stake. Fabindia generates annual revenue of Rs 200 crore selling ethnic menswear, womenswear, household furnishing, handicrafts and organic food. The company declined to declare the profit figure but said its balance sheet was â€œhighly profitableâ€.
Fabindia has extensive expansion plans and intends to grow the number of stores from 61 to over 200 in the next four years. The money raised will be used to strengthen its supply chain. Fabindia is setting up communityowned joint ventures in the rural areas with artisans and craftspersons as shareholders. Through the community-owned companies, the company intends to invest back into the supply base, making it easier for craftspeople to access money, design inputs and quality control mechanisms. The fund will also be used to develop support structure particularly technology and training.
Fabindia is essentially a retail platform for the hand made (both textile and non-textile) which brings rural craft to urban markets. At present it sources from 21 states and works with 15,000 craftspersons. The company said that in the next four years it would create 100,000 sustainable jobs in the rural, handicraft sector.
India's premium ethnic wear company was started by John Bissell who left his job as a buyer for Macy's New York to work as a consultant for the Ford Foundation. The idea was to develop India's export potential in the emerging textile industry. What Mr. Bissell discovered was a village-based industry with a profusion of skills hidden from the world.
Determined to showcase Indian handloom textiles while providing equitable employment to traditional artisans, Bissell established Fabindia in 1960. The company is now run by John Bissellâ€™s son William.
Mr. Wolfensohn, who was the president of World Bank for 10 years from 1995 to 2005, plans to open an investment banking group along with his children and friends. He wants to raise $500 million to $1 billion for investing in countries like India. He also plans to open an office in the country.
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