Kolkata-based footwear retailer Khadim’s is planning to give an exit to its existing PE partner Fairwinds through an IPO which should lead to a 40 per cent dilution in holding in the company.
In 2013, Fairwinds had invested ₹90 crore for a 34 per cent stake in Khadim’s with the balance being held by its promoters.
Siddhartha Roy Burman, Chairman & Managing Director, Khadim’s, said, “We did try to enter the capital market in the past but the conditions were not right for an IPO. But now we would like to give our PE partners an exit either through an IPO or offer-for-sale, which should happen within a year. The promoters would dilute an additional 6-7 per cent stake along with the 34 per cent held by Fairwinds.”
Despite having a pan-India presence, Khadim’s has its outlets predominantly in the East with over 800 outlets, of which about 190 are company-owned. It outsources the manufacturing of its footwear and also has a distribution arm.
Ramesh Venkat, Managing Partner & CEO, Fairwinds, said, “Khadim’s is in the right stage of growth to go for an IPO and we are in the process of getting the right valuation for the business. It has low working capital requirements and needs a small amount of fresh capital, which would be used for expansion of its stores. Post the IPO, the promoters would continue to hold majority shares in the company.”
With the intention of taking its stores to Tier 4 & 5 cities and penetrating deeper into the hinterland, Khadim’s would be using the franchise route primarily to expand its operations. Compared to Bata, the largest retailer with 1,900 stores, Khadim’s store count is almost half at 830.
With a sales turnover of ₹615 crore, Khadim’s posted a ₹31-crore PAT.
“Since the capital market is doing well, it would be the right time to take it to the next level. Khadim’s expects to become the number two player after Bata as its product profile is similar to that of Bata. Footwear retail is a ₹50,000-crore category growing at almost 16-17 per cent today,” added Venkat.
The Burman family-owned Khadim’s also hopes to be professionally managed once it becomes a listed entity.
“It would be easier to manage a a listed company,” added Burman. Listed companies in footwear retail today comprise Bata, Relaxo and Liberty.