Bain-, TPG-backed Lilliput to raise capital
The promoter of Lilliput Kidswear and the company’s investors, Bain Capital and TPG, have reportedly agreed to raise up to INR5 billion ($97.4 million) through a private placement for the children's clothing retailer, signaling that the parties’ months’ long feud has been put aside for the welfare of the company.
Investment and consulting firms Grant Thornton and Avendus Capital have been enlisted to help Lilliput raise the capital through the issue of fresh shares, The Economic Times reported, which would dilute the 55% stake held by Lilliput's founder and CEO Sanjeev Narula, and the stakes held by Bain and TPG, by approximately 10% each.
The capital would be used to fund Lilliput's daily operations and reduce its debts, and momentarily comes in lieu of an IPO, which has been the source of contention between Narula and the private equity firms.
Lilliput, which last year received $60 million and $26 million from Bain and TPG, respectively, initially planned to launch its IPO with the view of raising INR8.5 billion. However, Bain and TPG withdrew their support for the process after the firms and auditor Ernst & Young received an anonymous tip-off that led them to question the company's audited financial statements. Narula then obtained a court injunction that prevented Bain and TPG from selling their stakes or discussing the matter publicly, and announced in October that the company is seeking an out-of-court settlement with its investors.
One month ago, Narula saw a small victory, as the Delhi High Court forbade Bain and TPG from selling their shares in Lilliput Kidswear without first offering them to Narula.
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