Flipkart to buy 7.8% stake in Aditya Birla Fashion for Rs 1,500 cr

Mumbai, 23-Oct-2020

Flipkart will buy 7.8% stake in Aditya Birla Fashion & Retail (ABFRL) Ltd for Rs 1,500 crore by preferential share infusion at Rs 205 per equity share. The board of Aditya Birla Fashion & Retail Ltd (ABFRL) approved issuance of equity shares on a preferential basis to Flipkart Investments Pvt Ltd aggregating upto Rs 1,500 crore. After the deal, Flipkart Group will own 7.8% equity in ABFRL. After the deal, Flipkart will own 7.8% equity stake in AB Fashion on a fully diluted basis while the promoter and promoter group companies of ABFRL will hold 55.13%. "The Investment Agreement inter-alia provides for some rights such as preemption rights and right of first refusal which are for a limited period of between 1-5 years from the date of allotment of equity shares or if the equity shareholding of the Investor falls below a certain threshold," Aditya Birla Fashion and Retail Limited said in a statement. The development follows a spate of deal activity in the retail space led by Reliance Retail Ventures Ltd (RRVL), Kishore Biyani's Future Group, online retail giant Amazon in a bid to corner a majority of the booming Indian retail and consumer market. Kumar Mangalam Birla, chairman of Aditya Birla Group, said, �This partnership is an emphatic endorsement of the growth potential of India. It also reflects our strong conviction in the future of the apparel industry in India, which is poised to touch $100 billion 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. Over the years, we have shaped Aditya Birla Fashion and Retail Limited into a strong platform to capture future growth opportunities in India. This partnership is a critical component of that strategy." 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, 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 ABFRL statement added.
ABFRL is one of the largest Indian pure-play fashion and lifestyle company with a bouquet of leading fashion brands and retail formats. The company has a network of 3,004 stores, presence across approximately 23,700 multi-brand outlets with 6,700+ point of sales in department stores across India, it said.