Walmart-backed Flipkart will buy 7.8 per cent stake in Aditya Birla Fashion and Retail Limited (ABFRL) with an investment of Rs 1,500 crore, the fashion apparel announced on Friday.
ABFRL said in a regulatory filing said that it “has today approved the raising of Rs 1,500 crore by way of preferential issue to Flipkart Group. The equity capital will be raised at Rs 205 per share.”
“With this infusion, Flipkart Group will own 7.8 per cent equity stake in ABFRL on a fully diluted basis. The promoter and promoter group companies of ABFRL will hold about 55.13 per cent upon completion of the issuance,” it added.
Speaking about the partnership Aditya Birla Group Chairman Kumar Mangalam Birla said the “reflects our strong conviction in the future of the apparel industry in India, which is poised to touch USD 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, favourable demographics, rising disposable incomes and aspiration for brands. Rapid growth of technology infrastructure will further accelerate this process. 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.”
ABFRL said it 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, casual wear and ethnic wear, establishing these as the new engines of growth for the company.
Furthermore, ABFRL will accelerate the execution of its large-scale digital transformation strategy that will deepen its consumer connect and augment its backend capabilities, positioning it amongst the most comprehensive omni-channel fashion players in the country.
The company said it has also entered into a commercial agreement in relation to the sale and distribution of its various brands.
Ashish Dikshit, MD of ABFRL, said this deal also provides a tremendous opportunity to build the scale of existing brands and expand its brand portfolio into emerging consumer segments.
“Through this partnership with ABFRL, we will work towards making available a wide range of products for fashion-conscious consumers across different retail formats across the country.”
“…We look forward to working with ABFRL and its well established and comprehensive fashion and retail infrastructure as we address the promising opportunity of the apparel industry in India,” Kalyan Krishnamurthy, CEO of Flipkart Group, said.
The transaction is subject to regulatory approvals.