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Flipkart buys 7.8% stake in Aditya Birla Fashion

rore as it taps into the offline retail player’s large bank of apparel outlets to bolster its presence in the high-margin fashion business.

Billionaire Kumar Mangalam Birla’s retail business will issue preference shares to Flipkart, giving it a 7.8% stake, Aditya Birla Fashion said in a stock exchange filing on Friday.

The transaction was at Rs 205 per share, a 33.6% premium to Thursday’s closing price of Rs 153.4. Aditya Birla Fashion’s current owners will hold a 55.1% stake after the allotment.

While Flipkart will gain from Aditya Birla Fashion’s range of international and Indian brands, the deal will help the company cut down debt, which stood at Rs 2,776 crore as of March 31, 2020.

The investment will give it a bigger foothold as it battles it out with rival Amazon.com and billionaire Mukesh Ambani-run Reliance Industries, which is rapidly expanding its retail business via major acquisitions and funding from overseas investors, including Silver Lake and KKR.

In August, Reliance Retail Ventures, an arm of Reliance Industries, announced a plan to buy Indian retail pioneer Future Group’s units for Rs 24,713 crore.