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The board of Aditya Birla Fashion and Retail Limited today approved issuance of equity shares on a preferential basis to Flipkart Investments Private Limited aggregating to 1500 crore. The company has also entered into a commercial agreement in relation to the sale and distribution of various brands of the company.

Aditya Birla Fashion and Retail Limited said equity capital will be raised at 205 per share. Flipkart will own 7.8% equity stake in Aditya Birla Fashion and Retail Limited on a fully diluted basis.

The promoter and promoter group companies of Aditya Birla Fashion and Retail Limited will hold about 55.13% upon completion of the issuance.

"The investment agreement inter-alia provides for some rights such as preemption rights and right of first refusal which are for a limited period of between 1-5 years from the date of allotment of equity shares or if the equity shareholding of the Investor falls below a certain threshold," Aditya Birla Fashion and Retail Limited said.

Kumar Mangalam Birla, chairman of Aditya Birla Group, 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 $100bn 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, favorable demographics, rising disposable incomes and aspiration for brands. Rapid growth of technology infrastructure will further accelerate this process. Over the years, we have shaped Aditya Birla Fashion and Retail Limited into a strong platform to capture future growth opportunities in India. This partnership is a critical component of that strategy."

Aditya Birla Fashion and Retail Limited 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, casualwear and ethnic wear, establishing these as the new engines of growth for the company," said Aditya Birla Fashion and Retail Limited.

"Furthermore, Aditya Birla Fashion and Retail Limited will aggressively accelerate execution of its large-scale digital transformation strategy that will deepen the consumer connect of its brands, expand reach of its diverse brand portfolio, build strong omni-channel functionalities and augment its backend capabilities, positioning it amongst the most comprehensive omni-channel fashion players in the country," the company added.

Kalyan Krishnamurthy, CEO of Flipkart Group said, “Through this transaction with Aditya Birla Fashion and Retail Limited, we will work towards making available a wide range of products for fashion-conscious consumers across different retail formats across the country. 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."

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