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Has Myntra Got A Better Investment Offer Compared To Premji Deal?

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Myntra, arguably the online leader in the apparel segment is again in the news for two competing investment offers. While the Premji deal was about to get finalized, Myntra got an offer which seems more attractive. This had put a temporary hold to the previous offer while the board evaluate the opportunities at hand.

Although there is no official word available about the current negotiations from Myntra or the investment groups, ET was tipped by some insider who chose to stay unidentified. The investment in talks amounts to more than Rs 300 Cr.

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One group of investors is led by Premji’s (net worth $14 billion) family owned Premji Invest. The group also includes L Capital Asia (private equity arm of LVMH) and Sofina, an investment firm from Belgium. However, the members and the offer terms of the competing group are still unknown.

Myntra had incurred a loss of Rs 134.7 Cr after tax deductions in the fiscal year of 2013. They concluded the year with sales of Rs 212.4 Cr. However, the founders expect to make a Rs 800 Cr turnover during the current fiscal year and to end 2015 with an estimated revenue of Rs 2500 which will pull the company to safer waters.

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This already sounds tempting for investors and the fact that they have surpassed other online retailers in terms of unique visits also explains the urge in investment.

Interestingly, Sophina will also conclude the second deal in Indian ecommerce market which includes its investment in Flipkart last year. The Myntra deals comes at a crucial point when Flipkart, valued at $1.6 billion (Rs 10000 Cr), has stepped up efforts to boost its apparel sales.

However Myntra according to Comscore still dominates the other players in terms of unique visitors. The apparel industry makes more money than electronics (45-60 percent margin compared to 10 percent for electronics) which pretty much sums up the interest in the market.

Although it seems there is a high cash flow coming in to the Indian online retail market, the experts suggest this only holds true for brands that have made a name for them. It would be interesting to see the outcome of this deal and how it shapes up the online apparel retailers.

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