Tata Capital is exploring the acquisition of approximately 13% ownership in the high-end domestic fashion label Rare Rabbit, valuing the stake at $300 million. This strategic move is aimed at tapping into the purchasing power of India’s affluent consumer base, according to three sources with knowledge of the situation.
As the financial services division of the Tata conglomerate, valued at $144 billion and engaged in diverse industries from salt to aviation, Tata Capital is expressing investment interest in Rare Rabbit. This move aligns with a broader trend in the industry, where competitors like Reliance, led by billionaire Mukesh Ambani, are also showing a growing inclination towards premium fashion offerings.
According to the three sources, Tata has engaged in discussions with Rare Rabbit and is currently in the process of conducting due diligence. This follows the issuance of a term sheet proposing an investment of up to $40 million, aiming to secure a stake in the specialized fashion brand renowned for its men’s shirts and other apparel.
Manish Poddar, the founder of Rare Rabbit, and Tata Capital have chosen not to provide comments on the matter.
The individuals familiar with the matter opted to remain anonymous since the discussions are confidential.
Established in 2015 by the Indian family-run business Radhamani Textiles, Rare Rabbit offers a range of products, including shirts, jeans, jackets, and sneakers. The pricing spans from as low as $20 to the higher end, reaching $80, making it accessible to a broad spectrum of Indian consumers. The company conducts sales through online platforms and maintains a presence with 90 retail outlets across India.
In recent years, India’s fashion and apparel industry has attracted significant attention from both domestic and international brands, including names like Tommy Hilfiger and Japan’s Uniqlo. Retail giants such as Reliance and the Tata Group have capitalized on this trend by operating retail chains that cater to the thriving middle-class segment, offering a range of mid-priced clothing through outlets across the country.
The current discussions regarding the stake sale represent Rare Rabbit’s inaugural external fundraising initiative.
A local Indian private equity fund, A91 Partners, is reportedly considering a stake in the company and is in competition with Tata for a potential deal, as indicated by the three sources. A91 declined to provide any comments on the matter.
