Aditya Birla Fashion to raise $500m. prior to the split of Madura Fashion

Fashion and apparel giant Aditya Birla Fashion and Retail Ltd plans to raise $500 million (about Rs 4,300 crore) through preference shares and qualified institutional placement ahead of the proposed demerger of its key revenue platform.

The board of Aditya Birla Fashion and Retail Ltd on Wednesday approved raising capital through a preference share issue of $275 million and a QIP of $225 million, according to a stock exchange filing. The general meeting to approve the preferential issue is scheduled for 13 February.

From the total preference share issue, the promoters will inject $150 million, while Fidelity Investments will put in $125 million through its funds.

The promoter’s preference shareholding is at a premium of 17.5% to Tuesday’s closing price, the release said. Shares of Aditya Birla Fashion ended at 270.35 rupees on the Bombay Stock Exchange on Tuesday.

“This combined fundraising will leverage the company and position it to aggressively pursue its growth strategy through its multiple growth engines established over the past few years,” the company said.

ABFRL plans to spin off Madura Fashion & Lifestyle into a separate listed company called Aditya Birla Lifestyle Brands Ltd, nearly 25 years after it had acquired the company.

The demerger is expected to be completed by the end of this financial year, the company said.

Madura and Pantaloons contribute about 88% of the top line of ABFRL. Company officials have previously suggested that it could grow better as an independent entity.

In 2023-24, the company’s consolidated revenue grew 12.7% to 13,995.86 million. Rs. However, high expenses led to a net loss of Rs 738.01 crore, bringing the bottom line down to levels last seen in the wake of the COVID-19 pandemic in 2020-21.

Aditya Birla Fashion has four main divisions. The designer brands come under the ‘Ethnic Business’ division which includes haute couture designers Sabyasachi, ‘S&N’ by Shantnu & Nikhil, Tarun Tahiliani’s Tasva, House of Masaba.

Madura Fashion & Lifestyle houses international brands such as Louis Philippe, Van Heusen, Allen Solly, Peter England, Reebok, Forever 21, Simon Carter and American Eagle.

Pantaloons Fashion and Retail, acquired in 2012 from Kishore Biyani’s Future Group, is Aditya Birla Fashion’s accessible apparel chain with more than 400 stores in India.

Finally, its ‘Emerging Brands’ division with a portfolio of international brands under ‘The Collective’, such as Ralph Lauren, Hackett London, Ted Baker and Fred Perry, in addition to its direct-to-consumer digital brand ‘Tmrw’.

In September 2024, the fashion conglomerate had a network of 4,538 stores spread over 37,952 multi-brand stores with 9,047 sales points in department stores.