Aditya Birla Fashion and Retail Limited (“ABFRL”) has approved a preferential offer of Rs 1,500 crore to Flipkart Group.
Capital will be raised at a price of Rs.205 per share With this investment, Flipkart Group will have a fully diluted 7.8% equity share in ABFRL. After the issuance, the promoter and promoter group firms will own around 55.13 percent of ABFRL.
“This alliance is an unambiguous validation of India’s growth potential,” stated Kumar Mangalam Birla, Chairman of the Aditya Birla Group. It also represents our strong belief in the future of India’s garment industry, which is expected to reach $100 billion in the next five years.
Due to the strong fundamentals of a big and increasing middle class, favorable demographics, rising disposable incomes, and aspiration for brands, fashion retail in India are primed for significant long-term growth. This process will be accelerated even more by the rapid rise of technology infrastructure. We built ABFRL into a powerful foundation for capturing future growth prospects in India throughout the years. This collaboration is an important part of that plan.”
ABFRL intends to use the funds to improve its financial sheet and accelerate its expansion. The company intends to aggressively scale up its existing businesses where it has strong, market-leading positions while expanding its presence in developing high-growth categories such as innerwear, athleisure, casual wear, and ethnic wear, establishing them as the company’s new engines of growth.
Furthermore, ABFRL will aggressively accelerate the implementation of its large-scale digital transformation strategy, which will deepen its brands’ consumer connections, expand the reach of its diverse brand portfolio, build strong omnichannel functionalities, and enhance its backend capabilities, positioning it as one of the country’s most comprehensive Omni-channel fashion players.
“We look forward to this cooperation with Flipkart Group and our collaborative endeavor to please customers of a youthful and aspiring India,” said Ashish Dikshit, MD of ABFRL. Given ABFRL and Flipkart Group’s complementary strengths, this alliance has the potential to significantly accelerate the expansion of India’s garment industry and reshape apparel commerce. This transaction also gives the company a great potential to scale up its existing brands and diversify its brand portfolio into new consumer groups.”
The Flipkart Group will expand the variety of brands available on its e-commerce platforms Flipkart and Myntra by strengthening its relationship with ABFRL and expanding the selection of premium international and Indian brands available.
Flipkart’s technological expertise will improve ABFRL’s omnichannel capabilities, increasing consumer experiences while maintaining access to the premium loyalty programs and affordability structures for which Flipkart is recognized.
Upon conclusion of this transaction, ABFRL will have completed a Rs 2,500 crore capital raising since April 1, 2020, despite the tough macroeconomic conditions that have existed from the start of COVID 19.
This is a result of the Company’s strong brand portfolio, well-established operational methodology, respected parentage, trustworthy leadership, and promising business.
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