Singapore GIC sovereign wealth fund will acquire a minority stake of approximately 7.5% in Aditya Birla Fashion and Retail Limited, which owns Pantaloons.
The Aditya Birla Fashion and Retail board will meet on Tuesday to discuss selling a minority stake to a private equity firm to raise Rs.230crore.
The company will use the funds to expand its offline business, which is seeing sharp backtracking after two years of recession due to the pandemic. The Aditya Birla group presently owns a 56% stake in the company, with promoters holding the majority, a banker close to the development said.
Banker said, “Negotiations are ongoing with several players and GIC Singapore is leading the competition.”
The stock price remained unchanged at Rs 273 per share on Monday, with an overall market valuation of Rs 25,618 crore.
The company’s revenue for the March quarter was Rs 2,283 crore, up 25% from pre-Covid levels and the same period last year. It also announced that pre-depreciation profit would increase by 58% and interest and taxes would be Rs 401 crore.
According to the announcement, Singapore GIC will invest 770 crore rupees in subscriptions and warrants, and up to 142.5 crore rupees in one or more tranches within 18 months after the warrants are exercised.
The fashion retailer said its board of directors had approved a transaction to attract investment from its GIC subsidiary through the preemptive issuance of stock and warrants. After the transaction, Aditya Birla Group will own approximately 51.9% of the company’s shares. The company’s stock fell 0.71% in early market trading on Tuesday.
What did the management says about the deal between both companies:-
“ABFRL has a strong history of brand building, and its new business lines, including innerwear and ethnic wear, have a strong structural tailwind. We are confident that the company is well positioned to continue to transform itself into a future-proof consumer goods company built on the growth of India,” said Choo Yong Cheen, GIC’s Chief Investment Officer in a statement.
Kumar Mangalam Birla, Chairman of Aditya Birla Group, said: “The Indian apparel industry is set for sustainable long-term growth thanks to a strong middle-class base, favorable demographics, increasing disposable income and momentum for the brand.” Birla said, “Global institutional investor We are delighted to welcome GIC as a long-term partner on the company’s exciting growth journey.”
Aditya Birla fashion and retail (ABFRL)
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