Flipkart to Invest Rs. 1,500 Crore in Aditya Birla Fashion & Retail

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INTRO: Flipkart has today signed an agreement with Aditya Birla Fashion and Retail Limited (ABFRL) to invest Rs. 1,500 crore in the latter for a 7.8% stake. In a statement on Friday, the Birla Group company said that the agreement would involve the sale and distribution of various ABFRL brands, along with offering preemption rights and the right of first refusal to Flipkart for 1-5 years.

Flipkart To Collaborate In Business With Aditya Birla Group

According to an official filing with the stock exchanges, the money would be raised through preferential allotment of shares to Flipkart, with the issue price set at Rs. 205 per share. According to ET, the worth is 33.63 percent above ABFRL’s Thursday’s price of Rs. 153.40.
Kalyan Krishnamurthy, the CEO of the Flipkart Group, also expressed his satisfaction at the deal, saying: “Through this partnership with ABFRL, we’ll work towards making available a good range of products for fashion-conscious consumers across different retail formats across the country.”

The company plans to use the money to scale-up its existing businesses in sectors where it already has a strong position while increasing presence in emerging high-growth categories, such as innerwear, athleisure, casual wear, and ethnic wear. As per Moneycontrol, the company believes that these will soon emerge as the fastest growing sectors in the Indian apparel market and will offer new engines of growth for the company.

To Expand the Garment Business 

Announcing the investment, Kumar Mangalam Birla, the Chairman of the Aditya Birla Group, said: “This partnership is an emphatic endorsement of the expansion potential of India. It also reflects our strong conviction within the way forward for the garment industry in India, which is poised to the touch $100 billion within the next 5 years.”

This investment from Flipkart comes only a couple of weeks after Reliance Retail decided to accumulate Future Group’s retail businesses. It will enable Reliance to boost not only their offline but also JioMart, its up-and-coming grocery delivery business. Amazon India is, however, fighting a legal battle against Reliance and Future Group as it indirectly owns about 5 percent share in the company.

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