Singapore’s GIC Sovereign Wealth Fund will buy a 7.5 per cent minority stake in Aditya Birla Fashion and Retail Limited (ABFRL) for Rs 2,195 crore, Aditya Birla Fashion said in a statement on Tuesday. The fashion retailer said its board had approved the deal where the company would increase investment from a GIC-approved one by issuing equity and warrants on a priority basis. Following the transaction, Aditya Birla Group will hold about 51.9 per cent stake in the company. Shares of the company fell 0.61 percent in the first trading session on Tuesday.
Singapore’s GIC will now invest Rs 770 crore for equity and warrant subscriptions, and up to Rs 1,425 crore in one or more steps within 18 months of the transaction after warrant exercise, according to the statement.
“ABFRL has a strong track record of brand building and its new business line, which includes lingerie and ethnic clothing, has strong structured tailwinds. We are confident that the company is in a good position to continue its transformational journey into a future-ready consumer company driven by India’s growth, “said Chu Young Chin, Chief Investment Officer, GIC Private Equity.
Kumar Mangalam Birla, Chairman, Aditya Birla Group, said, “The Indian apparel industry is poised for long-term growth due to its strong core, favorable population, growing disposable income and aspiration for brands of a large and growing middle class.” “I am delighted to welcome GIC, a global institutional investor, as a long-term partner in the company’s exciting growth journey,” Birla added.
The retailer, which owns brands such as Louis Philippe and Allen Solly and recently acquired a stake in new-age brands such as House of Masabar, said it plans to use the raised capital to accelerate growth “built on the strengths of current business.” With the rise of the “emerging high-growth business model”.
The company plans to issue 1,02,16,450 equity shares at an issue price of Rs 288.75 per unit and 6,58,00,866 warrants at Rs 288.75 per piece. The company has announced an increase in authorized share capital from Rs 1,010.15 crore to Rs 2,010.15 crore. The company said the transaction was subject to regulatory and other formal approvals.