The Board of Directors of Aditya Birla Fashion and Retail Ltd (ABFRL) has authorized the management of the company to evaluate the vertical demerger of Madura Fashion & Lifestyle business from ABFRL into a separate listed company.
In a statement, the company said that the proposed demerger will enable the creation of two separately listed companies as independent growth engines with distinct capital structures and parallel value creation opportunities.
The Madura Fashion & Lifestyle business segment (MFL), consisting of four brands viz Louis Phillippe, Van Heusen, Allen Solly & Peter England along with casual wear brands viz. American Eagle & Forever 21, sportswear brand Reebok and the innerwear business under Van Heusen will be demerged into a separate listed entity. “The entity will have a strong balance sheet to power its future growth aspirations. Post necessary approvals, the demerger will be implemented through an NCLT scheme of arrangement, and all shareholders of ABFRL will have identical shareholding in the newly formed entity,” it said.
Post demerger, the remaining ABFRL will be focused on segments where there are tailwinds from a shift from unbranded to branded, premiumization, rise of super premium & luxury, and rapid growth in Gen Z focused digital first brands, the company stated. The post-demerger portfolio of ABFRL would consist of –
- Value and masstige fashion retail play under Pantaloons & Style Up
- Ethnic wear portfolio
- Bridge to luxury & luxury platform, The Collective, Galleries Lafayette and select luxury brands
- Digital brand TMRW
Once the demerger is completed, ABFRL will raise growth capital within 12 months to strengthen its balance sheet. Kumar Mangalam Birla, Chairman, Aditya Birla Group, said, “Over the years, our fashion and retail business has grown from 5 brands in 2 categories, to a dynamic portfolio of 20+ brands across all lifestyle categories. The evolution of this portfolio has seamlessly mirrored the shift in consumption trends, with a play encompassing all large value creation opportunities. As the platform embarks on its next transformational phase of growth, there is scope to re-evaluate capital structures to optimize different parts of the portfolio. The move towards a more simplified and streamlined architecture is designed to unlock distinct opportunities for value creation. This strategic realignment is poised to significantly enhance long-term stakeholder value.”
Ashish Dikshit, MD, Aditya Birla Fashion and Retail Ltd, said, “The restructuring will help bring in sharper focus anchored on a differentiated strategy aligned with the individual business segment. Each of these businesses have always been operated autonomously under respective CEOs.” He added, “Indian fashion and apparel sector is USD 100bn+ sector and is poised for a double-digit long-term growth. The simplified structure positions the businesses well for sustained growth and value creation.”
