The board of Aditya Birla Fashion and Retail Ltd (ABFRL) has approved the raising of ₹1,500 crore by way of preferential issue to Flipkart Group, the company said. The equity capital will be raised at ₹205 per share. With this infusion, Flipkart Group will own 7.8% equity stake in ABFRL on a fully diluted basis.
The promoter and promoter group companies of ABFRL will hold about 55.13% upon completion of the issuance, the company said in a statement.
“This partnership is an emphatic endorsement of the growth potential of India,” Kumar Mangalam Birla, Chairman, Aditya Birla Group said.
“It also reflects our strong conviction in the future of the apparel industry in India, which is poised to touch $100bn in the next 5 years.”
Fashion retail in India is set for robust long-term growth due to strong fundamentals of a large and growing middle class, favorable demographics, rising disposable incomes and aspiration for brands. Rapid growth of technology infrastructure will further accelerate this process, he said.
“Over the years, we have shaped ABFRL into a strong platform to capture future growth opportunities in India. This partnership is a critical component of that strategy,” Mr. Birla added.
ABFRL plans to use this capital to strengthen its balance sheet and accelerate its growth trajectory. “The company plans to aggressively scale-up its existing businesses where it holds strong, market leading positions while increasing presence in emerging high-growth categories such as innerwear, athleisure, casualwear and ethnic wear, establishing these as the new engines of growth for the company,” the company said.
Ashish Dikshit, MD, ABFRL said, “Given the complementary strengths of ABFRL and Flipkart Group, this partnership has the potential to dramatically accelerate the growth of the apparel industry in India and reshape apparel commerce. “This deal also provides a tremendous opportunity to build scale of existing brands and expand its brand portfolio into emerging consumer segments,” he added.
Flipkart Group will strengthen the range of brands offered on its e-commerce platforms Flipkart and Myntra, deepening its partnership with ABFRL, and enhancing the range of premium international and Indian brands on offer.
Flipkart’s technology prowess willl enhance ABFRL’s omni-channel capabilities, enriching customer experiences while continuing to provide access to premium loyalty programs and affordability.
Kalyan Krishnamurthy, CEO, Flipkart Group said, “At the Flipkart Group, we are focused on building new partnerships that will help us meet the demands of the discerning Indian consumer who seek quality and value.” “Through this transaction with ABFRL, we will work towards making available a wide range of products for fashion-conscious consumers across different retail formats across the country,” he said.
On completion of this transaction, ABFRL would have successfully executed a capital raise of ₹2,500 crore since April 1, 2020.
The transaction is subject to regulatory and other customary approvals.