Deal focus: Navis sews up textile investment

Thanks to its durability, comfort, and visual appeal, denim has long been a mainstay of the garment industry. But consumers worldwide are increasingly interested in socially and environmentally responsible manufacturing, and traditional denim production methods have a poor record on both counts.

Sanjeev Bahl, an entrepreneur born in India and educated in the US, saw a chance to leapfrog established players and take advantage of these developing trends. Saitex, the denim producer he founded in Vietnam in 2001, has focused on sustainable manufacturing since its inception. 

This has helped win supply contracts from global garment companies such as Calvin Klein and G-Star Raw, as well as Everlane, an online clothing distributor that emphasizes ethical standards and sustainability. 

"Denim is not a clean industry historically, and textiles in general is a polluting industry. Clothing companies are really starting to try and address this issue," says David Ireland, a senior partner at Navis Capital Partners. "I think Everlane went around the world for more than a year before they found Saitex and realized that they shared the same philosophy."

Saitex's relationship with premium brands demonstrated to Navis that it had staying power in the tough textile market. Now the Southeast Asia-based control deal specialist has taken over Saitex to help the company build on its track record of innovation.

Apparel exports play a major role in Vietnam's economy, reaching $31 billion in 2017. Navis was interested in the industry, but had found that dominant players were heavily invested in older facilities and resistant to changing what looked like a proven model. "It's tough for big players to change – the business has been historically reliant on low-cost labor and hasn't been as sensitive to environmental issues as it should have been," says Ireland. 

As a relatively new player, Saitex was less encumbered by legacy facilities than its peers. But more importantly, the company has always incorporated environmental standards such as LEED Platinum and Bluesign. 

The deal value has not been disclosed, but it fits in Navis' typical range of $50-100 million. The firm's immediate plan is to help Saitex consolidate its market position, but it also has more ambitious goals such as the construction of the company's own denim mill – allowing greater control over the fabric supply chain – and building highly automated mini-factories closer to its end consumers. Saitex expects these moves to further separate it from its peers.

"If it was just a run of the mill denim manufacturer, we probably wouldn't have been interested," says Ireland. "But there are a lot of initiatives by which we can accelerate this move toward sustainability and transparency in different parts of the value chain. The business is growing quite fast, so we're there to help make sure the team and the systems are in place to handle that growth."   

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• Topics
• Southeast Asia
• Industrials
• Consumer
• Buyouts
• Vietnam
• Navis Management
• manufacturing