Global Funds Eyeing Controlling Stake In Pepe Jeans India

Private equity and sovereign funds are vying to buy a controlling stake in the Indian arm of Pepe Jeans, people aware of the matter said

Five global funds including KKR, Carlyle, General Atlantic and Malaysia’s sovereign fund Khazanah have submitted non-binding offers for the company and are conducting due diligence. The parent company of Pepe Jeans India is seeking a valuation of Rs 2,000 crore for the Indian business.

There is no certainty that the funds will make a final offer for the company, though people said they found the business attractive. Kavindra Mishra, MD of Pepe India, declined to comment, saying the company does not respond to market speculation. KKR, Carlyle and General Atlantic declined to comment. Khazanah didn’t respond until press time.

Pepe Jeans India is a fully owned subsidiary of Barcelona-based Pepe Jeans Group. In 2015, LVMH-owned L Catterton (formerly L Capital Asia) and Lebanese investment firm M1Group acquired a majority stake in Pepe Jeans Group from Torreal, Artá Capital and L Capital Europe. KKR was said to be among the contenders for a stake in the global arm at the time. Kotak Group’s investment banking arm is advising the global parent on the divestment of the Indian unit.

The head of a global fashion brand said that it could be a good time for L Catterton and M1 to sell the brand in India. “They have reached hundreds of stores and got good profits and they know there is going to be pressure from new entrants and existing one. Currently they are at their peak, both in terms of revenue and valuation, so I think this is the best time to exit. It is always better for PEs to exit when you are at your peak,” the person said.

Pepe operates more than 200 branded outlets in India most of them franchisee run and its products are also sold through more than 1,500 multibrand outlets.