Many companies are raising funds for them like Reliance, ABFRL. These funds are crucial for a company’s growth. Reliance recently raised huge funds for its retail venture as well as for Jio. And after that ABFRL is all set.
Till now ABFRL (Aditya Birla Fashion and Retail) has raised Rs 1,500 crore. According to the recent news, ABFRL received its first investment. Flipkart Investments Private Limited is the company investing in the ABFRL. The company has issued referential equity shares to the Walmart-owned e-commerce giant. After this investment, Flipkart will own a 7.8% stake in the company.
At premium, Flipkart will enjoy the shares. These shares’ price set is of Rs 205 per share. And this is after a 33.45% premium in the price of shares of the company. On Thursday, the price of shares of the company was 153.40 per share. This company’s shares saw a rise in BSE stock exchange. After this announcement, the share price of the company rose by 6.88%. After this, the price rose to an intraday high of Rs 163.95 per share.
But as per the details, this issue of shares will require approval. This approval must be there by shareholders, regulatory approvals, and other customary conditions. Shareholders can approve by the way of the postal ballot.
After this, the promoter and promoter group companies of ABFRL will hold about 55.13 percent upon completion of the issuance.
Along with this Flipkart is also asked to appoint an observer. This observer will be on the company’s board.
Official Statements of ABFRL
“The Company has also, in furtherance of the existing B2B arrangements with Flipkart India Private Limited, entered into a commercial agreement about the sale and distribution of various brands of the Company,” ABFRL said in an exchange filing.
“The Investment Agreement inter-alia provides for some rights such as preemption rights and right of first refusal which are for a limited period of between 1-5 years from the date of allotment of equity shares or if the equity shareholding of the Investor falls below a certain threshold,” ABFRL said.
Official Statement of Kumar Mangalam Birla
Reacting to the development, Kumar Mangalam Birla, Chairman Aditya Birla Group 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 $100 billion in the next 5 years. Fashion retail in India is set for robust long-term growth due to the strong fundamentals of a large and growing middle class, favorable 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,” he said in the company statement.
ABFRL is planning to use this capital as a way to strengthen its balance sheet. And also to 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, casual wear, and ethnic wear, establishing these as the new engines of growth for the company,” the release said.
“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,” Kalyan Krishnamurthy, CEO of Flipkart Group said.