GIC investing significant money into ABFRL.

Target Date - November 23, 2023

Aditya Birla Fashion & Retail (ABFRL) has announced raising sizeable equity investment from GIC’s affiliate, Caladium Investment Pte. Ltd.

Key points to note –

  • GIC is Singapore’s sovereign wealth fund.
  • GIC has committed to infuse a total of Rs 2,195 crore
    • Rs 295 crore upfront equity @ Rs 288.75/ share picking up about 1.07% of the diluted equity
    • Rs 1,900 crore of warrants @ Rs 288.75/ warrant to be optionally converted by GIC into 1.:1 equity within 18 months.
      • 25% of this i.e., Rs 475 crore is invested upfront to subscribe the warrants
      • balance 75% is payable at the time of conversion
  • Aditya Birla Group (ABG) held 56.1% of ABFRL as at March 31, 2022. FIIs held 13.2% and DIIs 19.5%.
  • Post full conversion, GIC will own ~7.5% of ABFRL’s equity and Aditya Birla Group ~ 51.9%.

Purpose of the fund raise

Company statement – “ABFRL plans to use this capital to accelerate it’s growth engine built around strength of its current businesses along with a rapidly evolving play in emerging high-growth business models.”

In simple terms – in normal business course with no explicitly stated objective.

To me – the equity infusion was much needed given ABFRL’s current Balance Sheet profile, nature of business, it’s growth ambitions and expectations of tightening of the funding.

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