India’s Aditya Birla Fashion to raise $500m by selling stake to Fidelity, others

India’s Aditya Birla Fashion and Retail will raise $500 million by selling shares, including to US investment firm Fidelity, the retailer said on Wednesday.

ABFRL said it will raise $275 million by issuing preference shares, split between the retailer’s controlling shareholders and Fidelity, and the remaining $225 million through a qualified institutional placement.

The Birla family, which owns the biggest stake in ABFRL via multiple entities, will buy shares worth $150 million through one such entity at 317.45 rupees per share, a 17.5% premium to the stock’s last closing price.

Fidelity will buy shares worth $125 million at 272.37 rupees each, just about a 1% premium.

The Birla family’s stake in ABFRL will increase to 52.78% from 49.25% after the deal, per a Reuters calculation based on latest exchange data, while Fidelity will get a fresh 3.45% stake.

ABFRL will hold an extraordinary general meeting on Feb. 13 to decide on the investment proposals, it said.

The fundraise comes ahead of ABFRL spinning off its top money-making unit, Madura Fashion and Lifestyle, into a separate listed entity that it said would improve ABFRL’s financial position.

Madura Fashion, which houses the ‘Peter England’, ‘Louis Phillippe’ and ‘Van Heusen’ brands among others, accounts for roughly 70% of ABFRL’s revenue.

ABFRL’s shares were up 0.8% at 272 rupees as of 12:52 p.m. IST after initially rising 2% following the news. They have risen about 28% since ABFRL announced the demerger in April last year.

Reuters

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