Flipkart to acquire a 7.8% stake in Aditya Birla Fashion and Retail

Walmart-owned Flipkart Group has agreed to acquire a 7.8% stake in Aditya Birla Fashion and Retail Limited (ABFRL) which owns lifestyle brands such as Louis Philippe, Van Heusen, Allen Solly and Peter England.

As part of the deal, Flipkart will invest Rs 1,500 (approximately $204 million at current exchange rates) into ABFRL, it said in a statement.

The Bengaluru-based ecommerce major, which owns and operates a dedicated fashion vertical under Myntra, aims to enhance its consumer fashion segment with this strategic investment while ABFRL will use this capital to strengthen its balance sheet and propel growth.

“Through this partnership with ABFRL, 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,” Kalyan Krishnamurthy, CEO, Flipkart Group, said.

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Offline retail stores have been struggling for a few years against the rise of online shopping in India. For ABFRL, the investment comes at a time when the pandemic has further accelerated the switch to online retail from brick-and-mortar. Flipkart said it will offer its technology prowess to enhance ABFRL’s omni-channel capabilities and customer experiences.

ABFRL will use the funds to speed up the execution of its digital transformation strategy to deepen its consumer connection and augment its backend capabilities, the statement added. It also aims to scale-up its play in emerging high-growth fashion categories such as innerwear, athleisure, casual wear and ethnic wear. These categories will lead the next phase of growth for the company.

“Given the complementary strengths of ABFRL and Flipkart Group, this partnership has the potential to dramatically accelerate the growth of the apparel industry in India and reshape apparel commerce. This deal also provides a tremendous opportunity to build scale of existing brands and expand its brand portfolio into emerging consumer segments,” Ashish Dikshit, MD, ABFRL, said.

Besides the lifestyle brands, ABFRL also owns ethnic brands Jaypore and Shantanu & Nikhil; international multi-brand retailer the Collective; and operates international brands such as Simon Carter, fast fashion brand Forever 21 and a bunch of mono brands and premium global brands in India. ABFRL also operates a clothing retail chain under 'Pantaloons' brand.  The Company has a network of 3,004 stores, presence across approximately 23,700 multi-brand outlets with over 6,700 point of sales in department stores across India.

This is Flipkart’s second large investment in offline fashion brands this year. In June, the ecommerce firm invested Rs 260 crore (about $35 million) to acquire a significant minority stake in Arvind Youth Brands, a subsidiary of Arvind Fashions that owns the clothing brand Flying Machine.  Arvind Fashions, the branded apparel company, demerged from textile maker Arvind Group. It owns a diversified portfolio of brands, such as US Polo Assn, Arrow, GAP, Calvin Klein, Aeropostale and Ed Hardy. Arvind also runs the India business of beauty retailer Sephora and the value fashion retail chain Unlimited.