Flipkart to Buy 7.8% Stake in Aditya Birla Fashion for Rs 1500 Cr; Strengthens its Fashion Portfolio

  • The equity capital of Rs 1500 Crore will be raised at Rs 205 per share through preferential allotment of shares to Flipkart.
  • On the successful issuance of shares, the parent group of Aditya Birla Fashion will own 55.13% in the company.
  • The transaction benefits both companies to strengthen their presence in the respective markets.

Flipkart’s Investment arm, Flipkart Investments Private Limited, will pick up a 7.8% stake in Aditya Birla Fashion and Retail Limited (ABFRL), later said in a BSE statement. The equity capital will be raised at Rs 205 per share, the total amounting to Rs 1500 Crore.

The company has also entered into a commercial agreement in relation to the sale and distribution of various brands of the company. The money would be raised through preferential allotment of shares to Flipkart.

Upon completion of this transaction, Aditya Birla Fashion will hold about 55.13% while Flipkart will own a 7.8% equity stake on a fully diluted basis. With this announcement, the scrip rose 2.67% to hit a high of 157 on BSE.

Speaking on this development, ABFRL said, “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.”

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ABFRL will use this capital to strengthen its balance sheet and propel its growth ambition with renewed vigor. Some of the famous brands owned by the company are Allen Solly, Peter England, Van Heusen, and Louis Phillipe.

On the other hand, the Flipkart Group, through this partnership, will strengthen the range of brands offered on its e-commerce platforms Flipkart and Myntra, deepening its relationship with ABFRL, and enhancing the range of premium international and Indian brands on offer.

“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,” Kumar Mangalam Birla, Chairman Aditya Birla Group said.

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,” he added.

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