Aditya Birla Fashion and Retail (ABFRL)'s board approved funding $500 million on Wednesday through a combination of preferential issuance and qualified institutional placement (QIP) of equity shares, according to a company statement.
The promoter group will invest $150 million in a preferred issuance of $275 million, followed by Fidelity Investments, which will spend $125 million. The promoter participation is at a 17.5% premium to Tuesday's closing price. This demonstrates a significant belief in ABFRL's wealth generating potential, according to the statement.
The board also approved an equity offering via QIP of up to $225 million, bringing the total financing 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," according to ABFRL. "This capital raise is a crucial step toward the anticipated vertical demerger of the corporation into two independently listed entities. The demerger is planned to be completed by the end of current fiscal year.
A shareholder meeting to authorize the preferential offering is set for February 13, and the pricing date for the sale will be January 14.
Both preferential issuance and QIP will require customary and regulatory clearances.
As of September 30, ABFRL has 4,538 locations throughout about 37,952 multi-brand outlets, including 9,047 points of sale in department stores in India.
The apparel retailer is also developing a portfolio of digital-first brands through its technology-driven 'House of D2C Brands' initiative, TMRW.
