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Troubled British fashion retailer Superdry is to sell its South Asian intellectual property assets for £40 million as part of a joint venture agreement with Reliance Brands, India’s largest retailer.
Superdry shares jumped more than 20% after the company announced a partnership with Mukesh Ambani’s Reliance covering its brand assets in India, Sri Lanka and Bangladesh at lunchtime on Wednesday.
It comes after Superdry sold its intellectual property rights in the Asia-Pacific region to South Korea’s Cowell Fashion Company for £34 million this year as the company seeks to strengthen its balance sheet amid a cash crunch.
Superdry shares have lost around half their value over the past year as the debt-laden retailer has struggled with a cost-of-living crisis that has hit consumers’ spending power.
In April, the company said it no longer expected to “broadly break even” due to weakening demand from cash-strapped shoppers. Last month, the company reported a pre-tax loss of £78.5 million in the year to the end of April, compared with a profit of £17.6 million the previous year.
Superdry said in a statement on Wednesday that it was selling its South Asia intellectual property rights for a consideration of 40 million pounds. It expects to receive net proceeds of £28.3 million from the transaction, which will be used to improve its liquidity and fund part of its turnaround plan.
Reliance’s UK subsidiaries RBUK and Superdry will own 76% and 24% of the new entity respectively.
India’s richest man Ambani is betting on acquisitions to help drive future growth for his oil-to-telecoms conglomerate as incomes rise in the country of 1.4 billion people.
Superdry has taken steps to raise capital and shore up its balance sheet in recent months. This year it borrowed £80m from Bantry Bay Capital and then secured £25m from specialist retail investor Hilco, which also lent Wilko £4,000 before the discount chain collapsed due to an estimated £548m from unsecured creditors. million pounds.
In a statement about the deal, Superdry said: “Given the backdrop of India’s growing economy, increasing number of affluent shoppers and rising apparel consumption rates, the Superdry brand has attractive potential in the market.”
“As India’s leading fashion retail operator, RBUK is best placed to maximize this opportunity through its majority ownership of the intellectual property,” it added.
In 2012, Reliance brought the British retailer to India through a franchise agreement. Superdry said the new developments in the relationship will allow the company to “focus on growing its brand and increasing sales in more established regions where it has the strongest expertise”.
The deal is the latest UK retail deal for Reliance, which bought toy store Hamleys in 2019 for £68m. It has also signed franchise deals with luxury fashion brands such as Burberry and Balenciaga, while also opening stores selling more affordable fashions.
Reliance Retail has raised billions of dollars this year from private equity groups and sovereign wealth funds in deals that valued the company at $100 billion and provided financial impetus for further expansion.
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