Sarasavi Exports (Pvt.) Limited a supplier to major high street retailers in the United Kingdom, acquired Isabella (Pvt) Limited from DBApparel Group, a market leader in branded intimate apparel and hosiery in Europe. The value of the net assets acquired is approximately LKR 650 Million.
DBApparel, headquartered in France, owns 15 world renowned brands of which DIM and Nur Die, produced in Sri Lanka, are market leaders in their segments with a strong presence in France, Germany, and the Czech Republic.
The acquisition results in Sarasavi Exports (Pvt.) Limited contracting to supply products toDBApparel Group through a product buy back agreement. The transaction could facilitate the impending takeover of DBApparel by Hanesbrands Inc USA and secures the employment benefits of 800 workers at Isabella’s plants in Katunayake and Kundasale. The deal was structured and concluded by M Power Capital who provided the financial advisory and risk mitigation strategy for Sarasavi Exports.
Commenting on the announcement, Hemantha Kumara, Chairman and Managing Director, Sarasavi Exports, said, “This transaction allows Sarasavi Exports to establish itself as the premier exporter of hosiery products and socks from Sri Lanka and positions the company to take advantage of the free trade agreement with India and the pending free trade agreement with Peoples Republic of China. We intend to increase production capacity by investing in automation and product development to cater to new export markets. We are excited at the opportunities that will be available to Sarasavi subsequent to the acquisition of DBApparel Group by Hanesbrands Inc and are fully prepared to accept the challenge of lowering the cost of production while maintaining existing quality standards. We also believe this acquisition is in line with the government’s 5 hub strategy with respect to the commercial sector”.
Kapila Sri Chandrasekera, Head of Transaction Advisory and Telecoms, M Power Capital, said, “When Sarasavi Exports approached M Power Capital for financial advice on the transaction, we realised that due to the relative size of the takeover, the need to mitigate the risk of the acquisition by ensuring an ironclad buyback agreement and transaction price that reflected the underlying value of the transaction was paramount. We formulated a risk analysis and mitigation strategy for the acquisition which identified that the sale of Isabella could facilitate a transaction between the venture capital firm that owned DBApparel Group and Hanesbrands Inc. M Power Capital then negotiated a price and transaction structure that allowed Sarasavi Exports to limit its capital outlay for the purchase. We are pleased that both the buyer and seller acknowledged M Power Capital’s contribution in concluding the transaction, which is in line with our ethos that, for a successful transaction, both parties must derive value”.
