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Flipkart acquires 7.8% stake in Aditya Birla Fashion

Capital raise to further bolster ABFRL balance sheet and accelerate growth trajectory.

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New Delhi: Flipkart Group has acquired a 7.8 per cent stake in Aditya Birla Fashion and Retail (ABFRL) for Rs 1500 crore. ABFRL has approved the raising of Rs. 1500 crore by way of preferential issue to Flipkart Group. The equity capital will be raised at Rs 205 per share. The promoter and promoter group companies of ABFRL will hold about 55.13 per cent upon completion of the issuance.  

This deal will strengthen the range of brands offered on Flipkart's e-commerce platforms, including Myntra, and further accelerate its prominence in the fashion segment. Flipkart’s technology prowess will enhance ABFRL’s omni-channel capabilities, enriching customer experiences while continuing to provide access to premium loyalty programs and affordability constructs.

Flipkart Group CEO Kalyan Krishnamurthy said, “At the Flipkart Group, we are focused on building new partnerships that will help us meet the demands of the discerning Indian consumer who  seek quality and value. Through this transaction 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.” 

Aditya Birla Group chairman Kumar Mangalam Birla 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, 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 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. 

Furthermore, ABFRL 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.  

On completion of this transaction, ABFRL would have successfully executed a capital raise of Rs. 2500 crore since 1 April 2020, despite the challenging macroeconomic conditions since the onset of Covid2019. 

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