Aditya Birla Fashion to raise ₹2,195 crore from GIC

Aditya Birla Fashion and Retail Ltd. on Tuesday said its board has approved raising of up to ₹2,195 crore by way of preferential issuance of equity and warrants to an affiliate of GIC, Singapore's sovereign wealth fund.

GIC will invest ₹770 crore now towards subscription of equity and warrants, followed by up to ₹1,425 crore in one or more tranches within 18 months upon exercise of warrants, the fashion retailer says in an exchange filing. The transaction is subject to regulatory approvals.

GIC will own around 7.5% equity stake in ABFRL after the investment. Aditya Birla Group will hold around 51.9% stake in the company post the completion of this transaction.

The fashion retailer says it plans to use this capital to accelerate its growth engine built around its current businesses along with a rapidly evolving play in emerging high-growth business models.

"In the last few years, ABFRL has built a strong presence across all large and attractive segments of the Indian fashion market through organic and inorganic actions. This capital infusion will allow us to accelerate the growth of this platform of strong brands and well-established retail formats in the fast-growing branded apparel market and fortify our position as one of the leading players in the industry," says Ashish Dikshit, managing director of ABFRL.

"We look forward to benefit from GIC's extensive experience of investing in businesses globally and its long-term orientation as we plan to expand our presence and significantly enhance our digital play in the coming years to benefit from rapidly evolving consumer habits," he adds.

Earlier this year, the retailer announced its plans to set up an e-commerce platform. The newly incorporated entity aims to organically incubate and also acquire scalable direct-to-consumer (D2C) brands.

"Indian apparel industry 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. ABFRL has become one of the leading players in this market through its diversified portfolio of strong brands, wide distribution & an established business model and is well positioned to benefit from this opportunity," says Kumar Mangalam Birla, chairman Aditya Birla Group.

The company reported a consolidated net profit of ₹31.90 crore in the fourth quarter compared with a net loss of ₹195.86 crore during the January-March quarter of the previous fiscal. Its revenue from operations rose 25.32% to ₹2,282.83 crore for the quarter ended March as against ₹1,821.58 crore in the corresponding period of the previous fiscal.

Aditya Birla Fashion claims to have a network of 3,468 exclusive stores, 6,515 points of sale in department stores and 28,585 multi-brand outlets across India as of March 31, 2022.

The owner of the Pantaloons and Van Heusen brands has also forayed into branded ethnic wear business. It acquired a 51% stake in the 'Masaba' brand promoted by designer Masaba Gupta for ₹90 crore in January this year. In February 2021, it partnered with fashion designer Tarun Tahiliani and a month before that, ABFRL had announced the acquisition of a 51% stake in designer brand Sabyasachi. In 2019, the company acquired ethnic apparel and lifestyle retailer Jaypore for ₹110 crore.

"Branded apparel is a large and attractive market, and we believe that ABFRL is well-positioned with its best-in-class management team, strong portfolio of brands, and robust plan for capturing the next phase of digital-led growth. We continue to be excited about the long-term outlook of India and are keen to participate in ABFRL's sustained structural growth driven by improving demographics," says Pankaj Sood, head of Direct Investments, India and Africa, GIC.