Lilliput founder says L Capital has submitted bid
Lilliput Kidswear’s founder and managing director claims to have received an offer for the struggling business from L Capital, the private equity arm of luxury goods giant LVMH. A sale would facilitate the exit of Bain Capital and TPG Capital.
Sanjeev Narula told LiveMint that L Capital and another investor propose purchasing an 85-90% stake in the company, valuing the entire business at INR11 billion. "Now due diligence will happen and, by mid-June we should get the money," Narula said, adding that he would retain 10-15% and continue to be involved in management.
A Mumbai-based investment banker confirmed that a term sheet has been submitted. It was reported last month that, in addition to L Capital, the likes of KKR, The Blackstone Group and India Value Fund had signed non-disclosure agreements to enter into negotiations to purchase Lilliput. Mahindra & Mahindra, which operates mother and baby care business Mom & Me, has also expressed interest.
Bain and TPG invested $60 million and $26 million, respectively, in Lilliput in 2010. In recent years the company massively increased its debt exposure in order to finance expansion plans. It added 600,000 square feet of retail space in two years, equal to the total amount added over the previous eight years. Lilliput is thought to owe more than INR7 billion.
Private equity investors including Bain and TPG fell out with Narula after receiving an anonymous tip-off that led them to question the company's audited financial statements. Narula obtained a court injunction that prevented Bain and TPG from selling their stakes or discussing the matter publicly. It was announced in October that the company was seeking an out-of-court settlement with its investors.
Amidst the controversy, Lilliput's planned INR8.5 billion IPO was shelved.
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