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Aditya Birla Fashion and Retail Ltd  (ABFRL) on Friday said its board has approved plans to raise Rs 1.5 billion ($203.5 million) by issuing 7.8 per cent stake on a preferential basis to Walmart-owned Flipkart Group.

“Aditya Birla Fashion and Retail has today approved the raising of Rs 1.5 billion by way of preferential issue to Flipkart Group. The equity capital will be raised at Rs 205 ($2.78) per share,” ABFRL said in a regulatory filing.        .

“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 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 5 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.

“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,” he said.

ABFRL said it plans to use this capital to strengthen its balance sheet and accelerate its growth trajectory.

The company plans to aggressively scale-up its existing businesses where it holds strong, market-leading positions, while increasing presence in emerging high-growth categories such as innerwear, athleisure, casual wear and ethnic wear, establishing these as the new engines of growth for the company, it added.

ABFRL will aggressively accelerate the execution of its large-scale digital transformation strategy that will deepen the consumer connect of its brands, expand the reach of its diverse brand portfolio, build strong omnichannel functionalities and augment its backend capabilities; positioning it amongst the most comprehensive omnichannel fashion players in the country.

The company said it has also entered into a commercial agreement in relation to the sale and distribution of its various brands.

Ashish Dikshit, MD of ABFRL, said this deal also provides a tremendous opportunity to build the scale of existing brands and expand its brand portfolio into emerging consumer segments.

“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.”

Kalyan Krishnamurthy, CEO of Flipkart Group, said: “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.”

The transaction is subject to regulatory and other customary approvals.