HOADPL to repurchase 40% stake from US-based General Atlantic

19 November 2024, Mumbai

A prominent fashion design company, House of Anita Dongre (HOADPL), plans to repurchase nearly 40 per cent of its stake from the US-based private equity firm General Atlantic (GA). The stake was acquired by GA in stages starting from 2015 with an initial investment of Rs 150 crore. Over the period of last nine years, the company increased its stake to almost 38 per cent.

The decision to buy back the stake comes amid challenges for HOADPL, including a sluggish revenue outlook and a reduction in the company’s scale of operations. As per a January report by the rating agency ICRA, the company’s revenues for FY24 and FY25 are projected to decline to Rs 500-Rs 550 crore for FY24 and FY25 from Rs 606 crore in FY23, while its operating profit margin is expected to remain at 19-20 per cent. The company’s brands including AND and Global Desi have shifted their focus from premium to more mass-market positioning, leading to frequent discounts on online platforms.

Founded in 1995 by Anita Dongre, Meena Sehra, and Mukesh Sawlani, House of Anita Dongre was one of India's first major fashion houses. GA first acquired a 23 per cent stake from Future Lifestyle Fashions for around Rs 150 crore before increasing it to nearly 38 per cent. The remaining stake is held by the Dongre family. Despite the typical 6-7 year exit window for private equity firms, GA extended its investment in the fashion house.

As of September 2023, the group operated 209 EBOs, including a mix of company-owned and franchised stores, alongside 798 large-format stores and multi-brand locations. Following a leadership overhaul in March 2023, HOADPL’s promoters adopted a new strategy in response to industry-wide challenges. This included closing 236 underperforming retail sites, many in Tier-II and Tier-III cities, during the first half of FY24. Additionally, the company discontinued three brands—AND Girl (western children’s wear), Global Desi Girl (ethnic children’s wear), and ITSE (affordable ethnic wear)—liquidating inventory at significant discounts to manage cash flow.

ICRA expects the group’s debt coverage to remain tight in FY24 but anticipates sufficient liquidity to cover debt repayments, aided by improved profitability and stricter inventory management.

Although mid-sized fashion labels, online retail platforms, and a youthful demographic have contributed to the expansion of India's fashion sector, the market has become increasingly fragmented, especially in the traditional and designer fashion segments.

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