Superdry seals South Asian IP deal with Reliance Brands in £40m transaction

Superdry plc, a UK branded clothing company, has inked a significant intellectual property (IP) joint venture agreement with Reliance Brands Holding UK Ltd (RBUK), marking a strategic move to sell its IP assets, including the SUPERDRY brand, in South Asian territories like India, Sri Lanka, and Bangladesh. In this game-changing deal, RBUK and Superdry will jointly own the venture, with RBUK holding a majority stake of 76%.

RBUK, a subsidiary of Reliance Retail Ventures Limited (RRVL), has been Superdry’s exclusive franchise partner in India since 2012, solidifying a strong partnership that now extends into this transformative IP agreement.

The transaction, valued at £40 million, will translate to approximately £28.3 million in net proceeds for Superdry, after accounting for fees and taxes. Post-transaction, Reliance Brands Limited (RBL), the premium retail arm of RRVL, will continue to oversee brand operations in the designated territories, ensuring continuity of their successful collaboration with Superdry.

The Superdry brand has experienced rapid expansion in India since joining forces with RBL in 2012. With India’s growing economy, an increasing population of affluent shoppers, and rising apparel consumption rates, the brand holds promising potential in the market. As the leading fashion retail operator in India, RBUK’s majority IP ownership puts them in an ideal position to maximize this opportunity.

This transaction entails the permanent transfer of Superdry’s brand IP assets to a newly established joint venture entity. Superdry will invest £9.6 million in the joint venture, offsetting part of the £40.0 million consideration. The agreements also include provisions for ongoing collaboration, ensuring a smooth transition and continued success.

Additionally, Superdry secures a perpetual, irrevocable, and sub-licensable license to manufacture goods in the territories, enabling the company to maintain its presence in these markets.

The completion of this transaction is subject to certain conditions, including approval from Superdry’s shareholders and lenders. Once these conditions are met within three months, the transaction will close within ten business days.

Superdry believes that this partnership with Reliance will pave the way for future growth in the South Asian territories, allowing the company to concentrate on expanding its brand and boosting sales in its more established markets.

For the financial year ending April 30, 2023, South Asian IP contributed approximately 1.8% of total Group sales, generating £11.0 million in revenue and approximately £2.6 million in profit before tax.

Upon satisfaction of the conditions precedent, Superdry anticipates receiving approximately £28.3 million in net proceeds, which will bolster the company’s balance sheet, enhance liquidity, and support ongoing working capital requirements as part of its Turnaround Plan.

This transaction falls under Class 1 of Superdry’s financial transactions and is contingent on shareholder approval. Superdry plans to send a circular to its shareholders and convene a general meeting for this purpose in due course, with further details to follow.

Liberum Capital Limited is acting as the Sponsor to Superdry in connection with this transaction.