Jabong parent GFG gets 300-million euro funding

The Dollar Business Bureau

 Global Fashion Group (GFG), the owner of fashion retailer Jabong, on Monday announced it has secured funding of €300 million from Rocket Internet and Investment AB Kinnevik.

“With this investment, Kinnevik will own at least 25% and Rocket at least 21.9% of GFG. The fashion platform will use the funds for logistics, marketing and product development,” Global Fashion Group (GFG) said in a press release.

Jabong has been on a loss-making streak: In the financial year 2015-16, Jabong announced an operating loss of Rs.426 crore. The company had reported an operating loss in 2014-15, too.

The company’s total revenue growth crawled by just 7% to Rs.866 crore in last fiscal from Rs.811 crore in fiscal 2014-15.

The investment is expected to revive the company’s fortunes, especially at a time when it is looking to cut its operating costs. Jabong had earlier been unable to find a buyer even at $100 million.

A report released by Rocket Internet said Jabong remained the only loss-making company in GFG’s portfolio during January-June 2015. Jabong’s revenue growth was also slowest, at just 26.5% y-o-y during the mentioned period, among the group companies.

In December last year, former Benetton India Managing Director Mohanty took charge of Jabong, after its founders Praveen Sinha and A C Mohan stepped down from the company.

“The funding will help the firm enhance its business operations,” said Sanjeev Mohanty, MD and CEO, Jabong.

Rocket Internet had earlier sold its online furniture site FabFurnish to Future Retail at a valuation of Rs.11 crore.