New Delhi, June 4 -- Walmart-owned ecommerce giant Flipkart sold its stake in Aditya Birla Fashion and Retail Ltd (ABFRL) on Wednesday, a day after exiting a logistics company that it backed a decade ago.
Flipkart offloaded its entire 6% stake in the Aditya Birla Group company for about Rs 587.7 crore ($68.4 million at current forex rates) through open market transactions on Wednesday, stock-exchange data show.
The exit comes four-and-a-half years after Flipkart invested about Rs 1,500 crore ($204 million then) in the fashion retailer to boost its offline presence. Flipkart had received a 7.8% stake in ABFRL at the time. However, its stake diluted over time as the fashion retailer issued fresh shares.
The development came after Flipkart sold its entire 9% stake in logistics company BlackBuck, generating multi-fold returns on its investment. Flipkart first invested in BlackBuck in 2015 and later made additional infusions.
Flipkart is the second online retailer to exit an offline venture within six months. In December last year, Amazon sold its stake in Shoppers Stop for about Rs 276 crore. Amazon had bought the stake in 2017 as part of a plan to expand its physical presence in India.
Meanwhile, Aditya Birla Fashion's shares took a big hit on stock exchanges on Wednesday, tumbling 10.7% to close at Rs 76.79 on the BSE.
The company's share price underwent a technical adjustment last month as ABFRL demerged its Madura Fashion & Lifestyle division into Aditya Birla Lifestyle Brands Ltd (ABLBL). Madura was the conglomerate's biggest revenue generator, contributing around 70% to the topline.
In 2023-24, the company's total revenue from all its businesses grew 12.7% to Rs 13,995.86 crore. However, it slipped into a net loss of Rs 738.01 crore, levels last seen in the aftermath of the pandemic in 2020-21.
Madura Fashion & Lifestyle houses international brands such as Louis Philippe, Van Heusen, Allen Solly, Peter England, Reebok, Forever 21, Simon Carter, and American Eagle.
Aditya Birla Lifestyle is likely to be listed on stock exchanges later this month. Flipkart and other shareholders of Aditya Birla Fashion will get the same number of shares in Aditya Birla Lifestyle as the record date for the demerger is May 22. The demerger exercise is expected to be completed by the end of 2025.
ABFRL acquired Madura Fashion almost 25 years ago and decided to spin it off into ABLBL as it felt the division could grow better as an independent entity.
Alongside the demerger, ABRFL is also raising $500 million through preference shares and qualified institutional placement, the company informed stock exchanges in January.
Published by HT Digital Content Services with permission from VC Circle.