Flipkart to acquire 7.8% stake in Aditya Birla Fashion

Aditya Birla Fashion and Retail Limited approved issuance of equity shares on a preferential basis to Flipkart Investments Private Limited aggregating to Rs. 1500 crore (US$ 203.66 million). The company has also entered into a commercial agreement in relation to the sale and distribution of various brands of the company. Aditya Birla Fashion and Retail Limited said equity capital will be raised at Rs. 205 (US$ 2.78) per share. Flipkart will own 7.8% equity stake in Aditya Birla Fashion and Retail Limited on a fully diluted basis.

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 US$ 100 billion in the next 5 years. 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."

Aditya Birla Fashion and Retail Limited 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," said Aditya Birla Fashion and Retail Limited.

"Furthermore, Aditya Birla Fashion and Retail Limited will aggressively accelerate execution of its large-scale digital transformation strategy that will deepen the consumer connect of its brands, expand reach of its diverse brand portfolio, build strong omni-channel functionalities and augment its backend capabilities, positioning it amongst the most comprehensive omni-channel fashion players in the country," the company added.

Kalyan Krishnamurthy, CEO of Flipkart Group said, “Through this transaction with Aditya Birla Fashion and Retail Limited, 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."

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.