Nykaa, Reliance Looking To Acquire Promoter Stake In TCNS Clothing

Nykaa, Reliance looking to acquire stake in TCNS Clothing

SUMMARY

One of the biggest stakeholders of TCNS Clothing, TA Associates, is selling the entirety of its 29.24% stake

Aditya Birla Fashion, Trent Ltd, and PE investors TPG Capital and Advent International have also shown interest in acquiring a stake in TCNS Clothing

The interest from Nykaa comes as the ecommerce platform is looking at diversifying its product offerings from its existing line of personal care products

Reliance Retail, Nykaa, Aditya Birla Fashion and Trent Ltd, along with private equity (PE) investors such as TPG Capital and Advent International, have shown interest in buying a stake in listed apparel manufacturer TCNS Clothing, the parent company of womenswear brands W, Wishful, Elleven and Aurelia.

One of the biggest stakeholders in the company, TA Associates, is selling the entirety of its 29.24% stake, Mint reported, adding that the company’s promoters might join TA Associates and sell a part or all of their 32% stake in the womenswear brand.

Of the four brands that the apparel maker operates, W and Aurelia are the most significant ones. The two brands contributed a total of 93% to TCNS’ total business during the September 2022 quarter.

Following the news, shares of TCNS Clothing surged, ending 8.7% higher at INR 606.65 on the BSE on Wednesday. Going by Wednesday’s market cap, TA Associates’ stake in TCNS Clothing is worth more than INR 1,000 Cr.

TCNS Clothing reported a 31% year-on-year (YoY) decline in its net profit to INR 7.64 Cr in the September quarter of 2022, while its revenue rose 38% to INR 352.29 Cr.

The interest from Nykaa in buying a stake in TCNS Clothing comes as the ecommerce platform is looking to diversify its product offerings from its existing line of personal care products. The startup has been making moves to consolidate its position in the apparel category.

Last month, the listed ecommerce startup signed a pact with the UAE-based Apparel Group to expand its operations in the Gulf Cooperation Council (GCC) region. Earlier this year, the beauty ecommerce platform announced its foray into the men’s innerwear and athleisure category as well.

Nykaa already serves a large female customer base and TCNS Clothing would create additional synergy for it to explore.

Avendus Capital is said to be advising TA Associates on the stake sale.

Nykaa reported a 344% YoY jump in its net profit to INR 5.2 Cr in Q2 FY23, while its operating revenue increased 39% YoY to INR 1,230.8 Cr during the quarter.

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