Future Group CEO Kishore Biyani has not had much luck in ecommerce. FutureBazaar.com, Big Bazaar Direct and his 2016 acquisition FabFurnish have all shut down. In fact, last year he had sworn off the online space for at least two years. But the siren song of etailing has proved irresistible.
In a regulatory filing yesterday, Biyani-led Future Lifestyle Fashions Ltd (FLFL) disclosed that it has reached a conditional agreement with leading e-commerce fashion business Koovs to acquire up to 29.9 per cent stake in it, subject to regulatory and procedural approvals.
According to Mint, FLFL will shell out Rs 140 crore for this acquisition, which will be funded through internal accruals and the money it had raised though a stake sale to Singapore-based private equity firm L Catterton Asia in May. "We hope to become one of the largest online fashion retailers," Biyani told the daily.
"This marks a giant step forward in the Koovs' journey to win the efashion market in India. FLFL with its leadership position as an integrated branded fashion player and the Koovs brand and technology platform are an unbeatable combination. This investment will bring enormous benefits to our customers and partners as well as significant value for all shareholders," said Lord Waheed Alli, the founder and chairman of Koovs, in a statement.
According to Biyani, "This investment would complement the existing value chain for FLFL as an integrated branded fashion player. FLFL's strong retail presence backed by owned brands coupled with Koovs online strategy will help reach more customers and create value for all stakeholders".
The statement added that Koovs will first issue FLFL with 57,876,600 new ordinary shares at a price of 10p per share - representing 24.8 per cent stake - raising 5,787,660 pounds in cash. In the second phase, the London-listed fashion etailer will seek to raise up to 10 million pounds of equity at a price of 15p per share. "Lord Alli has committed to invest 1.5 million pounds in the Equity Raise and FLFL has agreed to make additional investments to take its ownership up to 29.9 per cent," said Koovs.
FLFL owns and markets about 30 fashion brands through exclusive brand outlets, department stores and multi brand outlets, as well as company-operated chains such as Central and Brand Factory. In fact, the company collectively operates more than 400 stores spread over 6 million sq ft of retail space. According to the daily, FLFL's brands will now be sold online on Koovs while the latter's merchandise - curated international brands as well as private labels - will retail at FLFL's chains.
It remains to be seen if this tie-up can give FLFL an edge in a market dominated by Flipkart-owned Jabong-Myntra. While Flipkart operates under the marketplace model, FLFL is a unique player in the fashion industry due to its integrated "design to distribution" model. Perhaps Koovs will break Biyani's ecommerce jinx at long last.