The Aditya Birla Fashion and Retail (ABFRL) has announced a strategic move to split its retail business into two segments by separating the Madura Fashion division into its own listed entity. This decision forms part of a broader effort to unlock valuation, with a focus on enhancing the value of each entity.
The board approved the plan to split the company into two independently listed firms. This move aims to turn them into separate growth drivers, each with its own capital structures and separate value creation opportunities. Moreover, the management of the company has been authorised to evaluate the vertical demerger of the Madura Fashion and Lifestyle business from ABFRL into a separately listed company.
Under the proposed demerger, Madura Fashion and Lifestyle, comprising renowned brands such as Louis Philippe, Van Heusen, Allen Solly, and Peter England, along with casual wear giants American Eagle and Forever 21, the innerwear division and Reebok sportswear brand will amalgamate into a separate listed entity.
In a regulatory filing, the company said, “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, it said.”
Following the demerger, the remaining ABFRL will focus on high-growth segments such as premiumization, the transition from unbranded to branded products, the emergence of ultra- premium and luxury goods, and the quick expansion of GenZ-focused digital-first brands.
Kumar Mangalam Birla, Chairman of Aditya Birla Group, said, “Over the years, our fashion and retail business has grown from 5 brands in 2 categories to a dynamic portfolio of 20+ brands across all lifestyle categories. The evolution of this portfolio has seamlessly mirrored the shift in consumption trends, with a play encompassing all large value-creation opportunities.”
“As the platform embarks on its next transformational phase of growth, there is scope to re-evaluate capital structures to optimise different parts of the portfolio. The move towards a more simplified and streamlined architecture is designed to unlock distinct opportunities for value creation. This strategic realignment is poised to significantly enhance long-term stakeholder value,” he added.
Post demerger, the remaining ABFRL portfolio will comprise of brands like Pantaloons and Style Up, The Collective, and Galleries Lafayette, and digital-first brands like TMRW, along with ethnic and designer labels like Shantanu and Nikhil, Tarun Tahiliani, Sabyasachi, and House of Masaba.
