Aditya Birla Fashion and Retail Ltd. said on Tuesday that its board had approved the raising of up to ₹2,195 crore through a preferential issue of shares and warrants to a subsidiary of GIC, Singapore’s sovereign wealth fund.
GIC will now invest ₹770 crore in equity and warrant subscription, followed by up to ₹1,425 crore in one or more tranches within 18 months of exercise of the warrants, the fashion retailer said in a swap folder. The transaction is subject to regulatory approvals.
GIC will hold an approximate 7.5% stake in ABFRL after the investment. Aditya Birla Group will hold approximately 51.9% of the capital of the company after the closing of this transaction.
The fashion retailer says it plans to use this capital to accelerate its growth engine built around its current business as well as a rapidly evolving game in emerging high-growth business models.
“Over the past few years, ABFRL has built a strong presence in all important and attractive segments of the Indian fashion market through organic and inorganic actions. This injection of capital will enable us to accelerate the growth of this brand platform. strong and well-established retail formats in the fast-growing branded apparel market and solidify our position as one of the industry’s leading players,” said Ashish Dikshit, Managing Director of ABFRL.
“We look forward to benefiting from GIC’s extensive experience investing in companies globally and its long-term focus as we plan to expand our presence and significantly improve our digital game in years to come in order to benefit from rapidly changing consumer habits,” he adds.
Earlier this year, the retailer announced plans to implement an e-commerce platform. The newly incorporated entity aims to organically incubate and also acquire scalable direct-to-consumer (D2C) brands.
“The Indian apparel industry is poised for robust long-term growth owing to strong fundamentals of a large and growing middle class, favorable demographics, rising disposable incomes and aspiration for ABFRL has become one of the leading players in this market with its diverse portfolio of strong brands, wide distribution and established business model and is well positioned to capitalize on this opportunity,” said Kumar Mangalam Birla, Chairman of the Aditya Birla Group.
The company recorded a consolidated net profit of ₹31.90 crore in the fourth quarter, compared to a net loss of ₹195.86 crore in the January-March quarter of the previous fiscal year. Its operating revenue increased by 25.32% to ₹2,282.83 crore for the quarter ended March, from ₹1,821.58 crore for the corresponding period of the previous fiscal year.
Aditya Birla Fashion claims to have a network of 3,468 exclusive stores, 6,515 department store outlets and 28,585 multi-brand outlets across India as of March 31, 2022.
The owner of the Pantaloons and Van Heusen brands has also ventured into the branded ethnic clothing business. He acquired a 51% stake in the ‘Masaba’ brand promoted by designer Masaba Gupta for ₹90 crore in January this year. In February 2021, she partnered with fashion designer Tarun Tahiliani and a month before, ABFRL announced the acquisition of a 51% stake in designer brand Sabyasachi. In 2019, the company acquired ethnic clothing and lifestyle retailer Jaypore for ₹110 crore.
“Branded apparel is a large and attractive market, and we believe ABFRL is well positioned with its best-in-class management team, strong brand portfolio and solid plan to capture the next phase of digital-driven growth. We We continue to be excited about India’s long-term prospects and keen to participate in ABFRL’s sustained structural growth driven by improving demographics,” says Pankaj Sood, Head of Direct Investments, India and Africa, GIC.