Aditya Birla Fashion and Retail Ltd. (ABFRL) has announced its intention to demerge its Madura Fashion & Lifestyle (MFL) business into a separate listed entity.
The move aims to create two growth engines with distinct value creation trajectories, as well as a well-articulated capital allocation strategy and parallel value creation opportunities.
The MFL vertical comprises four lifestyle brands: Louis Phillippe, Van Heusen, Allen Solly, and Peter England, along with casual wear brands like American Eagle, Forever 21, and Reebok.
According to an ABFRL press release, this portfolio has built a leadership position over time and has a proven track record of delivering consistent revenue growth, profitability, strong free cash flows, and high return on capital.
The entity will possess 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,” ABFRL added.
Post demerger, the remaining ABFRL will focus on high-growth segments, with a shift from unbranded to branded, premiumisation, the rise of super-premium & luxury, and rapid growth in Gen Z-focused digital-first brands.
“This is an attractive portfolio comprising multiple high-growth segments in large addressable markets with strong value creation opportunities,” the Aditya Birla Group company stated.
The post-demerger portfolio of ABFRL will consist of Value Retail, Ethnic Portfolio, Luxury, and Digital brands.
Subsequent to the completion of the proposed demerger, ABFRL will raise growth capital within 12 months to infuse strength into its balance sheet.
“Over the years, our fashion and retail business has grown from five brands in two categories to a dynamic portfolio of 20+ brands across all lifestyle categories,” said Kumar Mangalam Birla, Chairman of Aditya Birla Group.
“The evolution of this portfolio has seamlessly mirrored the shift in consumption trends, with a play encompassing all large value creation opportunities,” Birla added.
ABFRL, a part of the Aditya Birla Group, posted revenue of Rs. 12,418 crore spanning a retail space of 10.8 million sq. feet as of March 31, 2023.
