Ali Hasan
This may help Flipkart to compete against Amazon
Competition Commission of India (CCI) on Wednesday said it has approved the acquisition of 7.8% minority stake in Aditya Birla Fashion by Flipkart Investments Private Ltd (FIPL). Aditya Birla Fashion had in October last year approved plans to raise Rs 1,500 crores by issuing a 7.8% stake on a preferential basis to Walmart-owned Flipkart Group.
On completion of this transaction, Aditya Birla Fashion would have successfully executed a capital raise of Rs 2,500 crores since April 1, 2020, despite the challenging macroeconomic conditions since the onset of COVID 19, the company had said.
Aditya Birla Fashion share price gained 4% as soon as the news was out in the public. “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,” Kumar Mangalam Birla, Chairman of Aditya Birla Group, had said.
With this infusion, Flipkart Group will own a 7.8% equity stake in ABFRL on a fully diluted basis. The promoter and promoter group companies of ABFRL will hold about 55.13% upon completion of the issuance, ABFRL said in a regulatory filing earlier. In July, 2020, Flipkart had also bought a stake in Arvind Youth Brands, the owner of the Flying Machine brand, for Rs 260 crores.
Aditya Birla Fashion and Retail Ltd (ABFRL) is engaged in the business of manufacturing and retailing branded apparels, footwear, and accessories, through its retail stores, multi-brand outlets, departmental stores, online retail platforms, and ecommerce marketplaces across India.
Aditya Birla Fashion draws 6% of its business from sales via e-commerce platforms.
