Aditya Birla Fashion Acquires Eight Digital-First Brands For Rs 289 Crore
The brands acquired by ABFRL include Berrylush, Bewakoof, Natilene, Juneberry, Nauti Nati, Nobero, Urbano and Veirdo.
Aditya Birla Fashion and Retail Ltd. has acquired a controlling stake in eight digital-first fashion and accessories brands for about Rs 289 crore, marking its entry into the fast-exploding direct-to-consumer segment.
The brands include Berrylush, Bewakoof, Natilene, Juneberry, Nauti Nati, Nobero, Urbano, and Veirdo.
"The investment in these eight D2C brands establishes a strong foundation with a diversified portfolio across several fashion sub-categories ranging from casual wear, kid’s wear, and western wear," the fashion retailer said, in a stock exchange filing on Monday.
The expansion of these brands will be under the company's new subsidiary, TMRW. TMRW was set up earlier this year in line with the group's strategy to build a portfolio of new-age, digital brands across categories in fashion, beauty, and other lifestyle segments through organic and inorganic routes.
Bewakoof Acquired For Rs 200 Crore
ABFRL, part of a $60 billion global conglomerate, has spent about Rs 200 crore for a 73-80% stake in Bewakoof—the largest among the eight deals.
Bewakoof, among the early entrants in the D2C space, reported revenues of Rs 162 crore in FY22, higher than the Rs 129 crore it earned in FY21. However, it is yet to make a full recovery and cross the pre-Covid levels of Rs 210 crore in FY20.
Aditya Birla Fashion has already completed the transactions for Nobero for Rs 13 crore, Vierdo and Juneberry for Rs 21 crore, and Urbano for Rs 18 crore. The remaining acquisitions are expected to be completed in 30 to 90 days, it said.
Revenue Run Rate Of Over Rs 700 Crore
With these eight brands on board, TMRW has achieved a revenue run rate of more than Rs 700 crore.
"By tapping into ABFRL’s fashion capabilities and category expertise, TMRW is on the path to replicating the success of the digital-first space by building the next generation of memorable brands that will drive India’s e-commerce growth," Ashish Dikshit, managing director, ABFRL, said in a statement.
"The partnerships are poised to catapult the venture on a path to a Rs 1,500 crore annual revenue run rate over the next 12 months," he said.
With the recent investments and deep value addition, the company expects to scale the existing brands to become "category leaders", according to Prashanth Aluru, chief executive officer and co-founder of TMRW.
Aluru was roped in to head the company’s newly set-up entity as well as incubate a direct-to-consumer fashion and lifestyle brand in an attempt to create a "House of Brands" over the next few years.
The company said that it will acquire and incubate 30 brands within three years. This venture will initially be funded through ABFRL’s internal accruals. At an appropriate time, the company will look to bring in external capital to accelerate the growth journey.
Growth Prospects For D2C
The Covid-19 pandemic hit the traditional retail sector hard, making brands realise the importance of shifting towards a digital-first D2C model.
The total addressable direct-to-consumer market in India is expected to grow by over 15 times from 2015 to 2025, according to Statista.
In 2020, the total addressable D2C market was valued at $33.1 billion. By 2025, it is forecast to grow almost threefold and reach $100 billion, led by fashion and accessories. The beauty and personal care segment observed the highest e-commerce order volume in 2022 at 143%, followed by consumer electronics and fast-moving consumer goods, according to Statista.