Flipkart Bids Adieu to ABFRL: A Rs 583 Crore Exit Shakes the Market

Image Source: Indian Retailer

Strategic Exit Unfolds

Flipkart Investments, a unit of Flipkart Pvt Ltd belonging to Walmart Group, has fully exited its 6% share in Aditya Birla Fashion and Retail (ABFRL) via block deals.

The deal worth Rs 583 crore included the sale of 7.31 crore equity shares at floor price of Rs 79.50 per share, which is a 7.6% discount on ABFRL's last closing price.

Market Reaction and Financial Impact

After the sale of stake, ABFRL stock saw a steep fall of almost 11%, trading at Rs 76.94 per share on the National Stock Exchange.

This exit is at a time when ABFRL's financial performance is on the path of recovery, with its net loss decreasing to Rs 23.55 crore in Q4FY25 from Rs 266.36 crore during the same period last year.

Revenue from operations jumped to Rs 1,719.48 crore, up from Rs 1,575.12 crore in Q4FY24.

Historical Context and Deal Structure

Flipkart first invested in ABFRL during October 2020, pumping in Rs 1,500 crore into the company.

The recent deal was entirely secondary, i.e., no new equity was issued.

Goldman Sachs worked as the exclusive bookrunner for the transaction, facilitating smooth execution on NSE and BSE.

Implications for ABFRL and Flipkart

ABFRL, owner of brands Pantaloons, Van Heusen, and Louis Philippe, now continues to operate without Flipkart's support.

Flipkart's pullout indicates a change of strategy, perhaps channeling efforts into core e-commerce business or alternative avenues of investment.

Sources: BusinessWorld, Rediff Money, Economic Times, Outlook Business