Arvind Fashions raise Rs 439 crore from marquee investors
Shares of Arvind Fashions hit a 52-week high of Rs 263.50 as they rallied 10% on the BSE in intra-day trade on Monday after the company’s board approved the preferential allotment of equity shares aggregating to Rs 439 crore to various marquee investors, including promoters at the price of Rs 218.50.
In the past eight trading days, the stock of the country’s leading casual and denim player has rallied 33% on the BSE.
The marquee investors who participated in the fundraise are Akash Bhanshali, existing shareholders including ICICI Prudential Mutual Fund, various foreign institutional investors (including University of Notre Dame Du Lac, GP Emerging Markets Strategies L.P., The Ram Fund L.P.), Ashish Dhawan and other investors. Aura Merchandise Pvt. Ltd., a promoter entity has also participated in the preferential issue for an amount of Rs 40 crore.
With this fundraise, the company has completed the capital requirement needed for growth and navigating any uncertainties. With a focused strategy of profitable growth, the company is unlikely to require any more funding in the near to medium term. The part of the funds will also be utilised towards de-leveraging the balance sheet.
With the latest fundraise; the company has raised capital worth Rs 1,450 crore in the last two years (two right issues, strategic sale to Flipkart & V-Mart). The company’s gross debt had ballooned from Rs 670 crore in FY18 to Rs 1,210 crore in FY20 (cumulative negative free cash flow: around Rs 1,000 crore in FY19-21). Of total Rs 1,450 crore, Rs 760 crore has already been utilised towards debt reduction and funding working capital requirements (gross debt: Rs 913 crore as on June-2021).
The company has restructured its business model through discontinuing loss-making brands (GAP, Hanes, New Port, The Childress Place) and selling its loss-making format ‘Unlimited’. Its key focus now remains on strengthening its six high conviction brands. Prudent capital allocation, better working capital management and debt reduction trajectory would be the key monitorables, going ahead.
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