Flipkart to buy 7.8% stake in ABFRL for Rs 1,500 crore; preferential allotment price set at Rs 205

NEW DELHI: Aditya Birla Fashion and Retail (ABFRL) would raise Rs 1,500 crore from Flipkart, the company informed stock exchanges on Friday.

The money would be raised through preferential allotment of shares to Flipkart, who will own 7.8 per cent stake in ABFRL. The issue price of the preferential allottment is set at Rs 205, which is 33.63 per cent higher than Thursday's closing price of Rs 153.40.

This would be the second big deal in the offline consumer space in 2020 so far. Earlier in August, Reliance Industries' unit Reliance Retail Ventures acquired retail and wholesale business and the logistics and warehousing business from the Kishor Biyani-promoted Future Group as going concerns for a lumpsum amount of Rs 24,713 crore.

ABFRL board approved issuance of equity shares on a preferential basis to Flipkart Investments Private Limited, a foreign portfolio investor, duly registered under the Sebi (Foreign Portfolio Investors) Regulations, 2019, aggregating to Rs 1500 crore, the company told BSE.

"The company has also, in furtherance of the existing B2B arrangements with Flipkart India Private Limited, entered into a commercial agreement in relation to the sale and distribution of various brands of the Company. The Preferential Issue is subject to shareholders' approval (by way of postal ballot), regulatory approval(s) and other customary conditions," the company said.

"The investment agreement inter-alia provides for some rights such as preemption rights and right of first refusal which are for a limited period of between 1-5 years from the date of allotment of equity shares or if the equity shareholding of the investor falls below a certain threshold," it added.

The company had earlier on October 20 said that a meeting of the board of directors of the company will be held on Friday to inter alia consider of proposal for raising funds through issue of equity shares, convertible bonds, debentures or any other securities, through permissible modes including but not limited to a qualified institutions placement, preferential allotment, rights issue and further public.

Following the development, the scrip rose 2.67 per cent to hit a high of 157 on Bombay Stock Exchange (BSE).