INDIA's Flipkart on Friday(23) said that it will buy 7.8 per cent stake in Aditya Birla Fashion, which operates over 3,000 stores including the Pantaloons clothing chain, for $203.8 million.
As part of the strategic partnership, Walmart-owned Flipkart will sell and distribute various brands of Aditya Birla Fashion and Retail.
This is the latest development in the intense battle among Flipkart, Amazon, and Mukesh Ambani’s Reliance Retail to command how Indians shop.
"With this infusion, Flipkart group will own 7.8 per cent equity stake in ABFRL on a fully diluted basis. The promoter and promoter group companies of ABFRL will hold about 55.13 per cent upon completion of the issuance," Aditya Birla Fashion said in a regulatory filing.
Aditya Birla group chairman Kumar Mangalam Birla 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 five years. Fashion retail in India is set for robust long-term growth due to strong fundamentals of a large and growing middle class, favourable demographics, rising disposable incomes and aspiration for brands," he said.
"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."
Aditya Birla Fashion said it plans to use this capital to strengthen its balance sheet and accelerate growth trajectory.
Kalyan Krishnamurthy, CEO of Flipkart Group, said: "At the Flipkart Group, we are focused on building new partnerships that will help us meet the demands of the discerning Indian consumer who seek quality and value.
"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."
