Aditya Birla Fashion and Retail Ltd (ABFRL) said that it will raise INR 2500 crore within a year by splitting its retail business and forming a new listed entity, Aditya Birla Lifestyle Brands Ltd (ABLBL), which will encompass the Madura Fashion division.
The demerger will be executed using an NCLT scheme of arrangement. Once finalized, all ABFRL shareholders will hold equal stakes in both resulting companies. For every share they currently possess, ABFRL shareholders will receive one share in the new entity, in addition to retaining their existing holdings. ABFRL’s borrowings, amounting to roughly INR 3000 crore until March 2024, will be apportioned between the two companies, with an estimated INR 1000 crore debt shifted to ABLBL. The division of business assets and liabilities will be carried out in accordance with regulatory provisions.
Continue Exploring: ABFRL to spin off Madura Fashion & Lifestyle into independent listed company
“The demerger is anticipated to generate substantial value for ABFRL shareholders, as each separate entity will possess distinct capital structures, pursue independent growth paths, and present unique opportunities for value creation,” stated the company in a filing with the stock exchange. “Within a year following the demerger’s conclusion, ABFRL intends to secure approximately INR 2,500 crore in equity capital to bolster its balance sheet and finance the expansion of its ongoing operations. The company’s promoter group is fully committed to backing this proposed equity raise.”
The Madura business segment will encompass four lifestyle brands—Louis Phillippe, Van Heusen, Allen Solly, and Peter England—alongside casual wear labels American Eagle and Forever 21, sportswear brand Reebok, and the innerwear division under Van Heusen. With annual sales reaching INR 7,607 crore, Madura brands and affiliated businesses contributed to nearly two-thirds of ABFRL’s total revenue amounting to INR 12,418 crore. Following the demerger, the remaining ABFRL portfolio will feature value brands Pantaloons and Style Up, an assortment of ethnic and designer labels including Sabyasachi, Shantanu and Nikhil, and Tasva, luxury establishments such as The Collective and Galeries Lafayette, and digital-first fashion brands under TMRW.
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Analysts noted that the decision stemmed from the need to elevate stagnant valuation and offset losses observed during the last fiscal year, attributed to heightened investments in newer niche businesses.
In the last five years, ABFRL’s stock price has remained stagnant, with its market capitalization of INR 20,000 crore now standing at just one-seventh of Tata-owned Trent. This is a notable contrast to 2019, when both companies held similar valuations on the BSE.