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Home / Markets / Stock Markets /  Aditya Birla Fashion shares surge 15% as Flipkart to buy 7.8% stake in co

Aditya Birla Fashion shares surge 15% as Flipkart to buy 7.8% stake in co

Aditya Birla Fashion & Retail Ltd said its board approved raising  ₹1500 crore through preferential issue of equity shares to Flipkart Group. Photo: iStockPremium
Aditya Birla Fashion & Retail Ltd said its board approved raising 1500 crore through preferential issue of equity shares to Flipkart Group. Photo: iStock

  • Flipkart Group will own 7.8% equity stake in Aditya Birla Fashion and Retail on a fully diluted basis. The promoter and promoter group companies of ABFRL will hold about 55.13% upon completion of the issuance

MUMBAI: Shares of Aditya Birla Fashion & Retail Ltd (ABFRL) jumped as much as 15.29% after the company on Friday said its board approved raising 1500 crore through preferential issue of equity shares to Flipkart Group at 205 per share.

At 01:30 pm, Aditya Birla Fashion stock was at 174.40, up 13.69% from its previous close, while the benchmark index, Sensex gained 0.38% to 40711.98.

With this infusion, Flipkart Group will own 7.8% equity stake in Aditya Birla Fashion and Retail on a fully diluted basis. The promoter and promoter group companies of ABFRL will hold about 55.13% upon completion of the issuance.

ABFRL 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.

The investment agreement provides for some rights such as pre-emption rights and right of first refusal, which are for a limited period of 1-5 years from the date of allotment of equity shares or if the equity shareholding of the investor falls below a certain threshold.

ABFRL has also, in furtherance of the existing B2B arrangements with Flipkart India, entered into a commercial agreement in relation to the sale and distribution of various brands of the company.

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