Reports suggest that Aditya Birla Fashion and Retail Ltd (ABFRL) are planning to set up a new entity to raise and acquire new-age digital brands across fashion, beauty and other lifestyle segments, parallel to building a house of direct-to-consumer brands.

The board of directors of the company provided an omnibus approval to set up a new subsidiary towards building a portfolio of distinct, new-age, digital brands across categories in fashion, beauty and other allied lifestyle segments. The direct-to-consumer or D-2-C portfolio are expected to be built through organic and inorganic means.

According to the reports, the new direct-to-consumer venture will initially be funded through ABFRL’s internal accruals. At an appropriate time, the company plans to look to bring in external capital to accelerate the growth journey.

The newly launched entity organically incubates, and acquires promising and scalable D2C brands.

Ashish Dikshit, managing director, ABFRL says, “at ABFRL, we want to build the next set of iconic brands in the digital space as we evolve with our changing consumers.”

The D2C market at India is expected to touch $100 billion by 2025. The house-of-brands model has garnered investor interest as home-grown start-ups eye consolidation of niche online-first brands.

As per the reports, competition is becoming more with Thrasio-style e-commerce ventures such as 10Club and Global Bees raising $ 40 million and $150 million, respectively, in one of the largest early-stage rounds among Indian start-ups. Last November, Mensa Brands, which buys stakes in digital brands, raised $135 million at a valuation of around $1.2 billion.

Last month, the company acquired a 51 percent stake in House of Masaba Lifestyle Pvt. Ltd besides investments in Sabyasachi and Tarun Tahiliani. In 2019, ABFRL acquired omni-channel ethnic wear retailer Jaypore for Rs110 crore. Firm also signed a long-term licensing agreement to exclusively sell Reebok products in India and ASEAN.

Reports suggest that, the company reported a 44 percent year-on-year jump in the December quarter consolidated revenue Rs.2, 987 crores. Profit after tax flowed 23.7 percent year-on-year Rs.197 crore. The company launched more than 200 new stores across businesses and formats last year.