Rare Rabbit financing: Nikhil Kamath and Manyavar family office may join A91 in Rare Rabbit's Rs 500 crore financing

New age menswear and fashion brand Rare Rabbit closes its first round of institutional funding of Rs 500 crore led by investment fund A91 Partners, several people in the know said.The fundraiser will see participation from the family office of Ravi Modi, founder of Vedant Fashions who runs ethnic fashion brand Manyavar, and Zerodhas co-founder Nikhil Kamath. They are likely to collectively invest around Rs 150 crore.

The A91 is expected to pump the remaining Rs 350 crore.
The transaction will see around Rs 250 crore of primary capital coming into the company, with the rest being a secondary sale of shares by the husband-wife duo of Akshika and Manish Poddar, according to people close to the deal.

Rare Rabbits' valuation is pegged at Rs 2,200 crore, these people said. Bootstrapped to date, the brand is among the fastest growing direct-to-consumer (D2C) brands to have emerged in the fashion segment.

Queries sent to Poddar, Kamath and A91 Partners did not elicit any response. Siddhartha Saraf, chief investment officer of Manyavar family offices, declined to comment.

Last year, Rare Rabbit had discussions with Tata Capital, but those discussions fell through, according to people familiar with the discussions.

Financial overview

According to one of the people cited above, Rare Rabbit made a turnover of over Rs 600 crore in fiscal 2024, with an operating profit of over Rs 100 crore. The revenue represents over 60% year-on-year growth for the company, which reported Rs 376 crore in operating revenue for FY23.

According to documents sourced from the Registrar of Companies, the company reported a net profit of Rs 32 crore for FY2023. It is yet to file financial statements for FY24.

Industry executives said premiumization has been one of the key growth drivers for the men's fashion segment over the last 18-24 months. Apart from formal wear, casual shirts, jeans and pants in the premium segment have witnessed significant growth, according to informed sources.

Many premium brands have crossed the Rs 1,000-2,000 crore mark as premiumization of apparel continues at a rapid pace. In a year like FY24, where growth has been slower for many brands, the premium segment has seen rapid growth, an investor in the segment said.

Origins of rare rabbits

Founded in 2015, Rare Rabbit is hosted by Bangalore-based Radhamani Textiles. The House of Rare owns the premium women's fashion brand Rareism, the everyday clothing brand Articale in addition to the flagship product Rare Rabbit.

Radhamani Textiles was previously an apparel manufacturer that focused primarily on export markets. The company supplied fashion products to major brands, including global ones like Inditex, the European fast fashion group that owns Zara.

Most businesses focus on either manufacturing or creating a successful brand. This is a rare example of a company doing both, said a senior fashion industry executive based in Gurugram.

While Manish is the creative director of Rare Rabbit, Akshika manages the Rareism label.

The omnichannel menswear brand currently operates approximately 135 physical stores and plans to expand aggressively following its first funding round.

Nearly two-thirds of the company's business comes from the offline channel. After the funding, the company is expected to aggressively increase its store footprint in a short period of time, a person familiar with the matter said.

A number of these stores are present in tier II and III cities such as Ahmedabad, Bhopal, Dehradun, Ranchi, Guwahati and Vijayawada, besides the metro cities of Delhi, Bengaluru, Mumbai, Hyderabad and Chennai.

Who are the competitors?

Aditya Birla Fashion & Retail Ltd's Louis Phillippe brand generates around Rs 2,500 crore annually, while American fashion brand Tommy Hilfiger, operated in India by Arvind Ltd, is a Rs 1,000-1,200 crore brand. Rs.

Reliance Retail-led British fashion brand Marks and Spencer in India recorded over Rs 1,600 crore in operating revenue in FY23, with earnings before interest, taxes, depreciation and amortization (Ebitda) of over Rs 300 crore.

In FY24, the growth of several brands slowed and in such a year, the growth of the few highlights some powerful trends in the sector, one of the people said.

The lifestyle business segment of Aditya Birla Fashions, which houses premium fashion brands including Louis Philippe, Allen Solly, Van Heusen and Simon Carter, reported a turnover of Rs 4,995 crore for the first nine months of FY24, a decrease of 2% compared to the same period of FY23.

On April 26, ET reported that former Zomato executive Mohit Gupta and Myntra co-founder Mukesh Bansal. raised $26 million in seed funding for their high-end women's fashion startup Lyskraft in what was one of the largest seed funding rounds for an Indian startup amid the current funding crisis.

In February, 12-year-old menswear brand Bombay Shirt Company closed a Rs 54 crore funding round led by Singularity Growth and participation from CaratLane founder Mithun Sacheti. The cycle was a mix of primary and secondary transactions. The company had announced it would use new capital to open more stores.