PremjiInvest-backed Indian garment retail chain Fabindia, on Monday, announced pulling out of its Initial Public Offer (IPO) through which it seeks to raise $482 million. The plausible reason, the company stated, was unfavorable market conditions.
It said, “current market conditions were not seen to be conducive for listing a company of our size.”
The 1960-born company, which is a name amongst youth for its sustainable and traditional Indian wear, without going into details said, however, the company may consider going public in the future; at the same time, several global ESG-focused funds have expressed an interest to invest in the retail apparel chain.
Fabindia’s move to shelve its IPO plans joins the likes of other contemporary e-commerce firms, such as Snapdeal and boAt. They also rescinded their share sale offer in light of uncertain market conditions and foreseen tightening monetary policy by Fed.
Notably, jewelry retailer Joyalukkas also dropped its IPO plan to raise ₹2,300 crores, which it wanted to use for repaying debts and opening new stores.
“Sentiment is weak now. Most of these companies are looking to raise money at higher valuations than is possible in the market right now and there is no proper appetite,” said Hemang Jani, equity strategist at Motilal Oswal Financial Services, in a statement to news agency Reuters.
Also Read: FabIndia Appoints Investment Banker; Likely To Raise Up To $1 billion: Report
The Indian stock market is apparently in an uptight situation for the past few weeks. There has been a decline in both benchmark indices for seven consecutive sessions due to global uncertainty.
India’s benchmark Nifty 50 stock index is down 4.42 percent year-to-date amid uncertainty surrounding tightening monetary policies by major central banks in the face of rising high inflation. BSE sensex plunged 3.07% YTD.
How have the stocks of Fabindia’s listed rivals performed this year?
Vedant Fashions: Down 8.97%
Aditya Birla Fashion and Retail: Declined by 19.46%
Arvind Fashions: Negative 21.51%
FabIndia will now look out for other options for liquidity. The company may rethink filing for an IPO in the future, subject to growth capital requirements and prevailing market conditions.