John Bissell's export house of 1958 – better known as Fabindia today –has an unusual backer. Former World Bank president James Wolfensohn's private investment fund has picked up 6% stake in the country's marquee Indian ethnic wear company for $11 million. This puts the valuation of Fabindia at around Rs 750 crore.
Even though the Indian government does not allow foreign investment in multibrand retail, the policy was partially relaxed recently and FDI up to 51% allowed in single brand retail. Following this, several luxury brands such LVMH, Chritian Dior and Hermes began converting their franchisee agreements into joint ventures.
Fabindia generates annual revenue of Rs 200 crore selling ethnic menswear, womenswear, household furnishing, handicrafts and organic food. The company declined to declare the profit figure but said its balance sheet was “highly profitable”.
Fabindia has extensive expansion plans and intends to grow the number of stores from 61 to over 200 in the next four years. The money raised will be used to strengthen its supply chain. Fabindia is setting up community-owned joint ventures in the rural areas with artisans and craftspersons as shareholders.
Fabindia is essentially a retail platform for the hand made (both textile and non-textile) which brings rural craft to urban markets. At present it sources from 21 states and works with 15,000 craftspersons. The company said that in the next four years it would create 100,000 sustainable jobs in the rural, handicraft sector.
Mr Wolfensohn, who was the president of World Bank for 10 years from 1995 to 2005, plans to open an investment banking group along with his children and friends. He wants to raise $500 million to $1 billion for investing in countries like India. He also plans to open an office in the country.
(Source: Economic Times)
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