The latter stated in the BSE statement that Flipkart will purchase a 7.8% stake in Aditya Birla Fashion at a price of Rs 15 crore and Rs 205 per share. On Thursday, Flipkart Group and the US-based e-commerce company Amazon held talks with ABFRL separately to seek potential investment, and Flipkart may move forward in acquiring a minority stake in this offline retailer.
Kumar Mangalam Birla, Chairman of Aditya Birla Group, said: “This partnership is a firm support for India’s growth potential. It also reflects our firm belief in the future of India’s apparel industry, which is expected to reach 1,000 in the next five years. One hundred million U.S. dollars.”
This is the second largest transaction in the domestic retail market in the past two months after Reliance acquired the retail assets of Future Group at a price of nearly 250 billion rupees. Abneesh Roy, executive vice president of Edelweiss Research (institutional stocks), said the Flipkart-ABFRL transaction will further strengthen the market. Aditya Birla Fashion said that the funds will use to strengthen company’s balance sheet and accelerate the growth trajectory. The company plans to actively expand its existing businesses in a leading position in the market, while increasing its businesses in emerging high-growth categories such as interior, sports and leisure, casual wear and ethnic clothing, establishing these businesses as new engines for the company’s growth , it says.
After the completion of the transaction, despite the severe macroeconomic situation since the entry into force of COVID 19, starting from April 1, 2020, Aditya Birla Fashion will successfully complete a financing of Rs 250 crore. This deal will expand the range of brands offered on the Flipkart e-commerce platform (including Myntra). Flipkart and Myntra occupy an important position in the online fashion market in India. This transaction will further accelerate its position in the fashion industry.