ABFRL board approves raising $500 mn through preferential issuance and QIP

Fundraise will deleverage company and help in its growth strategy, says fashion retailer

The board of Aditya Birla Fashion and Retail (ABFRL) on Wednesday approved raising $500 million through a combination of preferential issuance and qualified institutional placement (QIP) of equity shares, said the company in a statement.

 

A preferential issuance of $275 million will be led by the promoter group investing $150 million and Fidelity Investments investing $125 million. The promoter participation is at a significant premium of 17.5 per cent over Tuesday’s closing price. This signals a strong conviction in the value creation potential of ABFRL, said the statement.

 

The preferential allotment will be subscribed by Fidelity Investments through its funds Fidelity Blue Chip Growth Fund, Fidelity Blue Chip Growth Commingled Pool, Fidelity Blue Chip Growth K6 Fund, Fidelity Series Blue Chip Growth Fund & FIAM Target Date Blue Chip Growth Commingled Pool.

 

The board also approved an equity issuance through QIP for up to $225 million, taking the total fundraise to $500 million.

 

“This combined fundraise will deleverage the company and position it to aggressively pursue its growth strategy through its multiple growth engines established over the last few years,” ABFRL said. “This capital raise marks an important milestone ahead of the proposed vertical demerger of the company into two separately listed entities. The demerger exercise is expected to be completed by the end of this financial year.”

 

A meeting of shareholders to approve the preferential issuance is scheduled for February 13 and the relevant date for pricing of issuance will be taken as January 14.

 

Both preferential issuance and QIP will be subject to customary and regulatory approvals.

 

As on September 30, ABFRL has a network of 4,538 stores across approximately 37,952 multi-brand outlets with 9,047 points of sale in department stores in India.

 

The fashion retailer is also building a portfolio of digital-first brands under its technology-led ‘House of D2C Brands’ venture TMRW.