Aditya Birla Digital Fashion Invests ₹75 Crore in WROGN

Virat Kohli-backed fashion brand WROGN has successfully raised approximately ₹75 Crore in funding from Aditya Birla Digital Fashion Ventures Ltd (ABDFVL). This significant investment highlights the growing interest in the direct-to-consumer (D2C) fashion space in India.

Stake Acquisition by Aditya Birla Digital Fashion Ventures

With this new funding, ABDFVL has increased its stake in WROGN from 17.10% to 32.84% on a fully diluted basis. According to a recent exchange filing by Aditya Birla Fashion and Retail, the infusion of funds represents the final portion of the previously stated primary investments into WROGN. The company emphasized that this investment was contingent on achieving certain milestone-based valuations.

Previous Investment and Strategic Moves

In June 2024, the Aditya Birla Group's fashion and lifestyle arm, TMRW, acquired a 16% stake in Universal Sportsbiz, the parent company of WROGN, for ₹125 Crore in an all-cash deal. At that time, it was noted that this minority investment could pave the way for a future majority stake acquisition.

The latest investment from ABDFVL allows it to hold 12,225 compulsory convertible preference shares (CCPS), constituting a 32.84% stake in WROGN. This move aligns with the company’s strategy to expand its portfolio of digital-first fashion brands.

Overview of WROGN

Founded in 2014 by siblings Anjana Reddy and Vikram Reddy, WROGN has established itself as a prominent D2C omnichannel men’s fashion brand. The brand offers a diverse range of products, including casual wear, footwear, and accessories. Despite recent challenges, WROGN has ambitious plans for growth, targeting sales worth ₹1,500 Crore over the next five years.

Financial Performance and Challenges

Despite its growth ambitions, WROGN's parent company reported a 29% decline in operating revenue, falling from ₹344.3 Crore in the previous fiscal year to ₹243.8 Crore in 2023-24 (FY24). Additionally, the D2C brand's net loss rose 28%, increasing from ₹44.3 Crore in FY23 to ₹56.8 Crore during the fiscal year under review.

Aditya Birla Group’s House of Brands Strategy

This investment is in line with the Aditya Birla Group’s strategy to scale up its “house of brands” approach. Since its inception in 2022, TMRW has invested a total of ₹444 Crore in acquiring majority stakes in seven D2C fashion brands, including The Indian Garage Co., Bewakoof, Nauti Nati, Juneberry, Urbano, Veirdo, and Nobero.

D2C Market Dynamics

The Indian D2C sector continues to attract significant attention from investors, even amidst a challenging funding environment often referred to as a "funding winter." Recently, various fashion startups have successfully secured funding, indicating ongoing investor interest in this space.

For instance, last month, Theater, a fashion startup, raised $1.5 Million in its pre-Series A round led by Prath Ventures. In August, women's fashion brand FASHOR secured $5 Million from Blume Ventures, while GenZ-focused startup Newme raised $18 Million in its Series A round led by Accel.

Conclusion

The investment by Aditya Birla Digital Fashion Ventures into WROGN marks a pivotal moment for both the brand and the Indian D2C fashion landscape. With the backing of a significant player like Aditya Birla, WROGN is well-positioned to enhance its market presence and achieve its ambitious growth targets in the coming years. As the D2C market continues to evolve, it will be interesting to observe how these investments shape the future of fashion retail in India.