FabIndia IPO: A fab move to gift 8 lakh shares to artisans, farmers

Garments and lifestyle retail brand FabIndia is set to launch a ₹4,000 crore initial public offering (IPO), joining a growing line of public issues by textiles and apparels firms. What sets the FabIndia IPO apart may be its promoters’ initiative to gift nearly 8 lakh shares to artisans and farmers who are part of the firm’s supply chain.

The company, which runs brick-and-mortar retail outlets across the country as well as e-commerce operations, plans to issue shares worth around ₹500 crore through the IPO. Also, its promoters and institutional investors are set to dilute around 2.5 crore shares under an offer-for-sale (OFS). FabIndia has already filed the draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI).

Sharing the wealth

According to the DRHP, FabIndia promoters Bimla Nanda Bissell and Madhukar Khera have announced an initiative to transfer around 4 lakh shares to artisans and 3.75 lakh shares to farmers engaged with the firm or its subsidiaries, as a ‘reward’ and “to express gratitude”.

The company has also summarised its Environmental, Social and Governance (ESG) initiatives in the DRHP, saying it believes that “enabling and uplifting the people we work with, taking care of the environment, and being ethical in our conduct will have a long and lasting positive impact”.

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“We have aimed to create social impact and foster economic wellbeing for our artisans, communities, employees and investors, using environmentally responsible and ethical means,” it said.

Use of IPO proceeds

FabIndia retails garments, accessories and lifestyle products as well as organic food and supplements through its omnichannel network. It will use the funds raised via the IPO for voluntary redemption of non-convertible debentures (NCDs), pre-payment or scheduled re-payment of a portion of certain outstanding borrowings, and general corporate purposes.

ICICI Securities Ltd, Credit Suisse Securities (India) Pvt Ltd, JP Morgan India Pvt Ltd, Nomura Financial Advisory and Securities (India) Pvt Ltd, SBI Capital Markets Ltd and Equirus Capital Pvt Ltd are the lead managers of the issue.

Apart from the promoter group, private equity and other institutional investors such as Premji Invest, Bajaj Holdings and Investment, the Nandan Nilekani family and Kotak India Advantage Fund are set to participate in the OFS.

The apparel brigade

FabIndia is the latest the join the fabric and apparel IPO bandwagon, its immediate predecessor being Go Fashion, which owns women’s bottom-wear brand Go Colours. The latter not only raised its targeted ₹1,014 crore via an IPO but also made a stellar debut on the stock market on listing day.

Other garments makers and retailers headed towards the stock market are ethnic women’s brand Biba Apparels, and wedding wear brand Manyavar. This apart, textiles firms such as Nandan Terry, a maker of terry towels, and Sanathan Textiles are also hiring investment bankers for upcoming IPOs.