ABRFL plans to raise Rs 2,500 crore capital within 12 months of demerger
Aditya Birla Fashion and Retail Sharlene D’Souza Mumbai
The board of directors of Aditya Birla Fashion and Retail Ltd (ABRFL) has approved the proposal to vertically de-merger its Madura Fashion and Lifestyle (MFL) business into a newly formed Aditya Birla Lifestyle Brands (ABLB).
ABFRL also plans to raise equity capital of Rs 2,500 crore with promoter participation within 12 months of the demerger, which will be used to strengthen the balance sheet and fund growth in the remaining business.The company’s promoter group is fully supportive of the proposed equity raise, ABFRL said in a statement.
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It added that ABLB will be listed separately on the exchange once the demerger is completed.
On April 1, ABFRL’s board of directors had authorised the company’s management to explore a vertical demerger of the MFL business from ABFRL into a separate listed entity.
It also said that once the demerger is completed, ABFRL shareholders will get one share of ABLB for every ABFRL share, in addition to their existing ABFRL shares, as per the share entitlement ratio approved by the board and recommended by the independent valuer.
Following the separation, ABLB will be home to Louis Phillippe, Van Heusen, Allen Solly, Peter England, American Eagle, Forever 21 and Reebok, as well as the Van Heusen branded innerwear business, while ABFRL will be home to the value and masstige fashion retail businesses under the Pantaloons and Style Up umbrellas, the ethnic portfolio which also includes designer wear, and the recently acquired TCNS portfolio.
It will also house The Collective, Galeries Lafayette, a selection of luxury brands and TMRW’s fast-growing bridge to luxury platform, a portfolio of digital-first fashion brands.
The business assets and liabilities will be divided between the two companies in accordance with prescribed regulatory provisions. Accordingly, ABFRL’s total borrowings, estimated at Rs 3,000 crore as on March 31, will also be divided between the two companies.
The company said the debt to be transferred to ABLB is estimated at Rs 1,000 crore and the remaining will continue to remain with ABFRL.
“The demerger is expected to unlock significant value for ABFRL shareholders as each listed company will have its own capital structure, independent growth trajectory and value creation opportunities,” ABFRL said in a statement.
The MFL business of the demerged company had sales of Rs 7,607 crore as on March 31, 2023, accounting for 64.81% of the demerged company’s total standalone sales, ABFRL said in a stock exchange filing.
The company also added that the demerger will be effected through an NCLT scheme of arrangement and once completed, all shareholders of ABFRL will hold equal shares in both the companies.
