BENGALURU (Reuters) -Reliance Retail, India's largest retailer, will buy UK-based Superdry's licenses and brand assets in three Asian countries for 40 million pounds ($48 million), expanding its tie-ups with foreign brands and giving the struggling UK fashion retailer much-needed funds.
Superdry's shares jumped 18% to a near two-month high on Wednesday after the company said it would use the expected 28.3 million pounds net proceeds to boost its liquidity and fund its capital needs as part of a turnaround plan.
The deal will be via a joint venture -- in which Superdry will invest 9.6 million pounds for a 24% stake -- and cover Sri Lanka, Bangladesh and India, where the UK company has been present since 2012 when it first partnered with Reliance Retail.
Billionaire Mukesh Ambani's Reliance Retail has more than 18,000 stores selling everything from groceries to electronics. It also has partnerships with foreign brands such as Jimmy Choo, Marks & Spencer and Pret A Manger.
The company, which competes with Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT)'s Flipkart, is in talks with investors including the sovereign wealth funds of Singapore, Abu Dhabi and Saudi Arabia for investments of around $1.5 billion, Reuters reported last month.
On the other hand, Superdry, which mostly sells sweatshirts, hoodies and jackets, has been grappling with weak orders from wholesale partners as consumers deal with a cost-of-living crisis and fall in real wages.
Last month, it warned of stunned revenue growth this year after posting a bigger-than-expected annual loss. It has been raising funds to bolster its finances and said cutting costs was a priority.
The deal with Reliance Retail, said Superdry, will help it "focus on growing its brand and increasing sales in its more established territories, where it has strongest expertise."
The assets in the deal generated about 1.8% of total group sales in the financial year through April 30, said Superdry.
Shares of Reliance Industries, the parent of Reliance Retail, were down 0.8% in afternoon trading. ($1 = 0.8286 pounds)