Can you tell me more details about the Fab India IPO?

One of India’s largest ethnic retailing brands, Fabindia, has filed its draft red herring prospectus (DRHP) with SEBI for the proposed IPO. It will comprise of a fresh issue of Rs.500 crore and an offer for sale of 250.51 lakh shares by existing promoters and early investors totalling to around Rs.3,500 crore. This will take the total size of the IPO to Rs.4,000 crore. This would value Fabindia at around Rs.20,000 crore in post IPO terms.

The fresh issue portion will be used for organic and inorganic expansion as well as debt reduction. Apart from the OFS, the promoter Bissell family will gift 7.75 lakh shares to farmers and artisans who have contributed to the growth of Fabindia. This will be gifted to them out of their stake. On the OFS, apart from the Bissell family, investors participating in the offer for sale include Premji Invest, Bajaj Holdings, Kotak India Advantage and others.

Fabindia has been around for over 60 years and operates via 300 branded Fabindia outlets and over 70 dedicated outlets of Organic India. Fabindia directly sources from over 2,200 farmers, scores of artisans across India. In addition, the total farmers impacted, including the associate sales, covers 10,300 farmers. Incidentally, Fabindia’s competitor, Biba, is also planning to file for IPO. Biba is backed by PE investors; Faering Capital and Warburg Pincus.

Fabindia IPO comes at a time when retailers are facing tough times. Then are trying hard to keep their stores open amidst the pandemic and imminent restrictions. The third wave of the pandemic created by the Omicron variant has again resulted in several shutdowns. This has sharply reduced footfalls at retail outlets. In the last 2 years, most retail outlets across India have faced falling sales traction and rising costs.