The Competition Commission of India (CCI) on Wednesday approved Flipkart's minority stake buying in Aditya Birla Fashion and Retail Ltd (ABFRL). E-commerce major Flipkart had proposed to acquire 7.8 per cent stake in ABFRL, through its wholly-owned subsidiary Flipkart Investments Private Ltd (FIPL), for Rs 1,500 crore.
In October last year, Aditya Birla Fashion's board had approved plans to raise Rs 1,500 crore by issuing a 7.8 per cent stake on a preferential basis to Walmart-owned Flipkart Group. After the dilution of the 7.8 per cent stake, the promoter and promoter group companies of ABFRL will hold around 55.13 per cent stake.
ABFRL intends to use the proceedings to "strengthen the company's balance sheet and accelerate its growth".
"Commission approves acquisition of a 7.8 per cent minority stake in Aditya Birla Fashion and Retail Ltd by Flipkart Investments Private Ltd," CCI said in a tweet.
The deal provides Flipkart certain rights such as pre-emption rights and right of first refusal for a period of 1-5 years from the date of allotment of equity shares, or if the equity shareholding of the investor falls below a certain threshold, along with a board seat. Being a non-exclusive deal, Aditya Birla Fashion could continue to have its own online presence as well as work with other platforms.
The Flipkart-ABFRL deal was 2020's second big deal in the offline consumer space. In August this year, Reliance Industries' (RIL) unit Retail Ventures acquired the retail and wholesale business as well as the logistics and warehousing business from Kishore Biyani-led Future Group as going concerns for a gross amount of Rs 24,713 crore.
In July last year, Flipkart had also announced Rs 260 crore investment into Arvind Fashion's subsidiary brand Arvind Youth which owns the brand 'Flying Machine'.
By Chitranjan Kumar