Flipkart picks up 7.8% stake in ABFRL

Flipkart picks up 7.8% stake in ABFRL

Aditya Birla Fashion and Retail Ltd has recently agreed to the raising of Rs. 1,500 crores by issuing preferential shares to the Flipkart Group at the rate of Rs. 205 per share which means that Flipkart Group will have 7.8% stake in ABFRL on a diluted basis. The proceeds of this issue will be utilized in making the balance sheet of the company strong and accelerating the future growth of the business. After this issuance, ABFRL’s promoters and promoter companies will have a total of 55.13% stake in the company. This decision of management led to a jump of 3.5% in the shares of the company on Friday.

 

With a network of 3,004 stores and across 23,700 outlets that are multi-branded, ABFRL owns several apparel brands like Van Huesen, Allen Solly, Louis Philippe and Peter England. Apart from these, it also has a vast retail base format under the brand Pantaloons

 

Mr. Kumar Managalam Birla, Chairman of the Aditya Birla Group also released a statement in regard of the same and it can be concluded from it that their prime agenda for this partnership is enhancing the potential growth and he mentioned that they will hit $“This  Bn in next 5 years in the apparel industry of the country. The company’s statement also stated that through this partnership taking place they will also be able to enhance their market reach and customer base.

 

India’s Fashion retail industry is to see a high growth rate due to changing and developing middle class income group of the country, rich demographics, higher propensity to spend and the love for brands. All these reasons are becoming stronger because of the rapidly advancing technological and other infrastructure within the country that is facilitating brands fulfil the ever-increasing demands for fashion.  

 

Walmart backed Flipkart will expand its online selling as it will start offering brands of ABFRL along with Myntra. This will enable them in enhancing their offering for both the Indian as well as the International brands through their marketplace.

 

Due to the unwanted scenarios like the Covid-19, many big offline retailers had to relook at their businesses as they largely relied on brick and mortar retail stores and the shoppers are steadily shifting their marketplace to online medium. Hence, such types of transactions or deals ignites the minds of these type of retailers to get associated with online platforms to continue with their business operations.