Aditya Birla Fashion and Retail Limited today said that its board has approved plans to raise Rs 1,500 crore by way of preferential issue to Walmart-owned Flipkart Group. The deal will see Flipkart pick up 7.8% equity stake in ABFRL on a fully diluted basis at a price of Rs 205 per share. Post the completion of the deal, the promoter and promoter group companies of Aditya Birla Fashion and Retail will hold close to 55.13% stake in the company. Aditya Birla Fashion and Retail is a pure-play fashion and lifestyle company with a network of 3,004 stores, presence across approximately 23,700 multi-brand outlets.
“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 $100bn in the next 5 years,” said Kumar Mangalam Birla, Chairman Aditya Birla Group. The company said that the capital raise will further bolster its balance sheet and accelerate growth trajectory.
According to the details of the deal, Flipkart will get 7.31 crore equity shares of Aditya Birla Fashion and Retail. The investment provides Flipkart with some rights such as pre emption 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 said in a regulatory filing on Friday.
Aditya Birla Fashion and Retail plans to aggressively scale-up its existing businesses where it holds 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 deal will also help the company accelerate execution of its large-scale digital transformation strategy. With this deal, Aditya Birla Fashion and Retail has now executed a capital raise of Rs 2,500 crore since April this year.
“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,” said Kalyan Krishnamurthy, CEO of Flipkart Group. Flipkart 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.