Aditya Birla Fashion plans to raise ₹2,500 crore after Madura demerger - CNBC TV18 (2024)

Aditya Birla Fashion and Retail Ltd said on Friday (April 19) it is planning to raise ₹2,500-crore equity capital within 12 months of the completion of its demerger for the Madura business.

Post-demerger, Aditya Birla Lifestyle Brands Ltd (ABLBL) will house the Madura business consisting of lifestyle brands (Louis Phillippe, Van Heusen, Allen Solly and Peter England), casual wear brands (American Eagle and Forever 21), sportswear brand (Reebok), and inner wear brand (Van Heusen).

The remaining businesses in ABFRL will be a portfolio of multiple growth platforms — namely value retail under Pantaloons and Style Up, ethnic, luxury (The Collective, Galleries Lafayette and others) and TMRW, a leading portfolio of digital-first fashion brands.

The board of directors of ABFRL has approved the vertical demerger of Madura Fashion & Lifestyle business (MFL) from ABFRL into a newly-incorporated company named Aditya Birla Lifestyle Brands Ltd, which will be listed separately on completion of the demerger.

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The demerger will be implemented through an NCLT (National Company Law Tribunal) scheme of arrangement and upon its completion, all shareholders of ABFRL will have identical shareholdings in both the companies.

On completion of the demerger, as per the share entitlement ratio approved by the board and recommended by the independent valuer, the shareholders of ABFRL will get one share of ABLBL for every one share in ABFRL, in addition to their existing shareholding in ABFRL.

The business assets and liabilities will be split between the two companies in accordance with the prescribed regulatory provisions. In line with this, the overall ABFRL borrowing, which is estimated to be ₹3,000 crore as of March 31, 2024, will be split between the two companies.

The estimated debt to be transferred to ABLBL will be ₹1,000 crore, and the balance will continue to stay with ABFRL. The proposed demerger will be subject to necessary approvals from shareholders, creditors, and regulators, along with other customary approvals.

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PWC LLP is the statutory auditor of the company and AZB is the legal counsel for the transaction. Bansi S Mehta Valuers LLP were the independent valuers to the transaction and INGA Ventures Pvt. Ltd provided the fairness opinion.

Shares of Aditya Birla Fashion and Retail Ltd ended at ₹231.60, up by ₹2.05, or 0.89%, on the BSE.