Flipkart is looking to buy a stake of 7.8% in Aditya Birla Fashion. The board of Aditya Birla Fashion has already approved the deal with Flipkart Investments Private Limited aggregating to ₹1500 crore. The company has also entered into a commercial agreement for the sale and distribution of various brands of the company. As Flipkart also owns Myntra, it will further broaden the portfolio currently on offer and boost the sales of both.
Aditya Birla Fashion and Retail Limited said equity capital would be raised at ₹205 per share. Flipkart will own a 7.8% equity stake in Aditya Birla Fashion and Retail Limited on a fully diluted basis. "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," Aditya Birla Fashion and Retail Limited said.
Kumar Mangalam Birla, chairman of 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 $100bn in the next five years. Fashion retail in India is set for robust long-term growth due to strong fundamentals of a large and growing middle class, favorable demographics, rising disposable incomes, and aspiration for brands. The rapid growth of technology infrastructure will further accelerate this process. Over the years, we have shaped Aditya Birla Fashion and Retail Limited into a strong platform to capture future growth opportunities in India. This partnership is a critical component of that strategy."
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