Aditya Birla Fashion To Raise Rs 800 Crore To Aid in Acquisitions of TCNS Clothing
Aditya Birla Fashion & Retail (ABFRL) will raise ₹700-800 crore in debt to help fund the acquisition of TCNS Clothing, a top company official said.
"For funding, we probably need about ₹700 to 800 crore through external debt, which we will have to raise... The remaining ₹800 crore will be funded through internal accruals," Ashish Dikshit, managing director of ABFRL told ET. "Our balance sheet is strong enough to raise that."
As part of the deal, ABFRL will make a conditional open offer to acquire up to 29% stake at ₹503 per share from public shareholders and acquire the remaining stake from the founder promoters to reach an overall shareholding of 51% in TCNS.
Post the transaction, TCNS will be merged with ABFRL and public shareholders of TCNS will receive 11 shares of ABFRL for every six shares that they hold in TCNS.
"It is a very fragmented market if you look at mid to lower part of the market. But in the premium side, I don't see too many brands of large size," Dikshit said. "Also, we have not just got a very strong asset in terms of the brand and distribution, we also got a management team which has consistently delivered over a long period of time."
With this acquisition, ABFRL's ethnic wear portfolio is expected to reach ₹5,000 crore in the next three years with TCNS contributing about ₹2,000 crore.
More than five years ago, ABFRL had segmented its business into six sub-categories - lifestyle, Pantaloon, athleisure, youth fashion, super premium, and ethnic. However, most brands are focused on western style clothing, a segment significantly smaller than the overall women's ethnic wear in the mass market.
In the ethnic segment, the company acquired Jaypore, a premium craft-based artisanal brand, and also invested in designer brands Shantanu & Nikhil, Tarun Tahiliani, Sabyasachi and Masaba.