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Aditya Birla Fashion sells minority stake to Singapore’s sovereign fund GIC, raises Rs 2,195 crore

After the transaction, Aditya Birla Group will hold about 51.9 per cent stake while Singapore’s GIC will hold about 7.5 per cent stake in the company.

Singapore's GIC sovereign wealth fund will buy a minority stake of about 7.5 per cent in Aditya Birla Fashion and Retail Limited, the owner of Pantaloons chain.

Singapore’s GIC sovereign wealth fund will buy a minority stake of about 7.5 per cent in Aditya Birla Fashion and Retail Limited (ABFRL) for Rs 2,195 crore, Aditya Birla Fashion said in a statement Tuesday. The fashion retailer said its board approved the deal in which the company would raise investments from an affiliate of GIC by way of preferential issuance of equity and warrants. After the transaction, Aditya Birla Group will hold about 51.9 per cent stake in the company. Shares in the company were down 0.71 per cent in early market trade Tuesday.

Singapore’s GIC will invest Rs 770 crore now towards subscription of equity and warrants, and it will be followed by up to Rs 1,425 crore investment in one or more tranches within 18 months of transaction, upon exercise of warrants, according to the statement.

“ABFRL has a strong track record of building brands and its new business lines, including inner wear and ethnic wear, have strong structural tailwinds. We are confident that the company is well-positioned to continue its transformational journey into a future-ready consumer company powered by the growth of India,” Choo Yong Cheen, Chief Investment Officer of Private Equity for GIC said in the statement.

Kumar Mangalam Birla, the chairman of Aditya Birla Group said, “Indian Apparel industry is set for robust long-term growth due to strong fundamentals of a large and growing middle class, favourable demographics, rising disposable incomes and aspiration for brands.” “I am delighted to welcome GIC, a global institutional investor, as a long-term partner in the company’s exciting growth journey,” Birla added.

The retailer, which owns brands such as Louis Philippe, and Allen Solly and recently acquired a stake in new age brands such as House of Masaba, said it plans to use the capital raised to accelerate growth “built around strength of its current businesses” along with growth in “emerging high-growth business models.”

The company plans to issue 1,02,16,450 equity shares at issue price of Rs 288.75 per unit and 6,58,00,866 warrants at Rs 288.75 per piece. The company also announced an increase in authorised share capital from existing Rs 1,010.15 crore to Rs 2,010.15 crore. The company said the transaction is subject to regulatory and other customary approvals.  

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