Flipkart will invest Rs 1,500 crore in Aditya Birla Fashion & Retail Limited (ABFRL) for a 7.8 per cent stake, the fashion apparel company has said in a press release.
Flipkart will invest Rs 1,500 crore for a 7.8 stake in Aditya Birla Fashion & Retail (File photo)
Walmart-owned Flipkart will buy 7.8 per cent stake in Aditya Birla Fashion & Retail Limited (ABFRL) for Rs 1,500 crore ($203.78 million). Aditya Birla Fashion & Retail runs brands like Pantaloons, Allen Solly, and Peter England. In a press release, Aditya Birla Fashion & Retail Limited said the equity capital will be raised at Rs 205 per share.
According to a report in the Economic Times, Flipkart and Amazon had held separate talks with Aditya Birla Fashion & Retail for a potential investment on Thursday. Now, Flipkart has bagged a stake of 7.8 per cent in its fashion business and will invest Rs 1,500 crore.
“The equity capital will be raised at Rs.205 per share. With this infusion, Flipkart Group will own 7.8% equity stake in ABFRL on a fully diluted basis. The promoter and promoter group companies of ABFRL will hold about 55.13% upon completion of the issuance,” it said.
Aditya Birla Fashion & Retail 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.”
Commenting on the deal, Kumar Mangalam Birla, Chairman 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 $100bn 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, favorable 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,” Kumar Mangalam Birla said.