In a quest to capture offline market Flipkart buys 7.8% stakes in Aditya Birla Fashion
Flipkart, the Walmart owned e-commerce company has struck a deal worth INR 1,500 crore with Aditya Birla Fashion and Retail Ltd (ABFRL). Under the deal Flipkart has bought 7.85 stakes in ABFRL. The retail sector has witnessed a surge in M&A transactions and analysts expect further rise in such deals.
Flipkart is the leader in online fashion market category with e-commerce platforms Myntra and Flipkart. ABFRL, on the other hand, houses lifestyle leaders like Allen Solly, Peter England, Van Heusen and also multi-brand Pantaloons chain. This deal is a part of current trend wherein online platforms are entering a strategic partnership with offline market platforms to have a broader presence.
As far as India is concerned, the penetration of online is very small. So for them to grow their business and get customers experience their products, they need physical presence and the FDI regulations come in their wayArvind Singhal,
“As far as India is concerned, the penetration of online is very small. So for them to grow their business and get customers experience their products, they need physical presence and the FDI regulations come in their way,” said Arvind Singhal, CMD of Technopak, a retail consultancy firm.
Experts say that with new deal, Flipkart and ABFRL would have to find way through norms of FDI (foreign direct investments). According to the norms any e-commerce firm or its group companies is barred from having a stake from selling on their online platform.
“Through this transaction with ABFRL, we will work towards making available a wide range of products for fashion-conscious consumers across different retail formats across the country,” said Kalyan Krishnamurthy, CEO, Flipkart Group.
ABFRL says that through this deal it envisions to work up its balance sheet and also exponentially raise its growth trajectory. “This deal also provides a tremendous opportunity to build scale of existing brands and expand its brand portfolio into emerging consumer segments,” said Ashish Dikshit, MD, ABFRL.