What is the idea behind Reliance Retail buying into Clovia?

Reliance Retail Ventures has sustained its appetite for inorganic takeovers of fashion brands in India. It has now acquired 89% stake in Purple Panda Fashions. The target company owns and operates the Clovia business; an industry leader in the premium intimate wear category. The total investment entailed is Rs.950 crore and the acquisition will be done through a combination of secondary-stake purchase and primary infusion of funds.

The remaining 11% will be held by the founding team comprising of Pankaj Vermani, Neha Kant and Suman Choudhary. Clovia had bene launched as a focussed brand in the year 2013 to cater to the intimate wear segment. RRVL director, Isha Ambani, was confident that this property would add style, quality and design to the intimate wear brand Clovia. The current management of Clovia will continue to be involved in operations.

It may be recollected that this the third major acquisition by Reliance Industries in the innerwear segment, in addition to Zivame and Amante brands, which it had recently purchased. Needless to say, Reliance Retail brings in scale and the access to a massive balance sheet, which would have bene tough for CLovia to achieve on its own. This gives them a much wider canvas to expand and deepen their market leadership.

Currently, RRVL is expanding its presence in the luxury retail landscape. It already has strategic alliances with Manish Malhotra, Raghavendra Rathore and Abraham & Thakore. Reliance Retail Ventures has also recently entered into joint venture with fashion designers Rahul Mishra and Anamika Khanna. Overall, the deal is expected to be value accretive to both the parties to the transaction.