Walmart India’s eCommerce firm Flipkart is investing $204 million (?1,500 crore) for a 7.8 percent stake in Aditya Birla Fashion and Retail Limited (ABFRL), the company said in a statement on Friday (Oct. 23).
“This partnership is an emphatic endorsement of the growth potential of India,” Kumar Mangalam Birla, chairman, Aditya Birla Group said. “It also reflects our strong conviction in the future of the apparel industry in India, which is poised to touch $100 billion in the next five years.”
ABFRL is in the midst of scaling its emerging high-growth fashion categories — athleisure, casual wear and ethnic wear — and anticipates these lines will drive the company’s expansion. The company is also stepping up the time table of its large-scale digital transformation strategy. The goal is to elevate ABFRL’s position among omnichannel fashion leaders through deeper connections with customers and improved backend capabilities.
Kalyan Krishnamurthy, chief executive officer of Flipkart Group, said the company is always seeking partnerships that will help it satisfy “the discerning Indian consumer who seeks quality and value.”
He added that by teaming up with ABFRL, Flipkart can expand the array of choices available to “fashion-conscious consumers” across India and tap into the country’s “promising opportunity” in the apparel industry.
Ashish Dikshit, MD of ABFRL, said the two companies complement each other and ABFRL is looking forward to “our collective journey to delight customers of a young and aspirational India.”
He added that the partnership is poised to ignite the acceleration of India’s apparel industry and “reshape apparel commerce.”
In July, Flipkart invested over $34.6 million for a minority stake in a division of Arvind Fashions for India’s youth. Arvind Youth Brands owns the popular Flying Machine brand of denim apparel.
In September, rumors started circulating that Flipkart was making preparations for an initial public offering (IPO) with a $45 billion to $50 billion valuation. That would bring Walmart a solid return on its $16 billion investment in 2018 for a 77 percent stake in Flipkart. The deal was the largest foreign direct investment in India.
Flipkart is preparing for a busy Diwali holiday and has hired 70,000 people ahead of the anticipated rush. India’s religious holiday begins Nov. 14 and lasts for five days.