Mothercare is set to expand into various Asian markets following a successful refinancing deal.
- The company has entered a joint venture with Reliance Brands UK, focusing on IP assets in South Asia.
- Reliance Brands UK acquires 51% stake for £16m, replacing a 30-year franchise agreement.
- Mothercare announces new £8m refinancing arrangement with Gordon Brothers, improving financial flexibility.
- The operations highlight the strategic value of Mothercare’s brand within Asia and its renewed confidence.
Mothercare is preparing to broaden its footprint within Asian markets, backed by a newly secured refinancing deal worth £24 million. A significant move in this endeavour is the formation of a joint venture with Reliance Brands UK, targeting the company’s intellectual property assets across key South Asian countries, including India, Nepal, Sri Lanka, Bhutan, and Bangladesh.
In this strategic partnership, Reliance Brands UK has taken a majority stake of 51% by investing £16 million. This investment replaces an existing 30-year franchise agreement that Mothercare had with the retailer. It represents a deeper commitment to the region, suggesting greater control and involvement over business operations.
In conjunction with this expansion, Mothercare has struck a refinancing agreement with Gordon Brothers, which sees the replacement of a £19.5 million loan with a more efficient £8 million arrangement. This move not only reduces the company’s leverage but also positions it more favourably to manage its financial resources.
Clive Whiley, the chair of Mothercare, remarked on the strengthened relations due to this agreement, highlighting the intrinsic value and resilience of the Mothercare brand in South Asia. The enhanced partnership with Reliance Brands is expected to amplify operational efficiency and brand presence in the region.
Additionally, the newly formed joint venture decreases the need for large facility sizes, effectively cutting down the cash interest costs. This financial reorganisation improves Mothercare’s operational flexibility significantly for the fiscal year 2025 and beyond, marking a pivotal shift towards a more stable financial future.
Mothercare’s strategic refinancing and partnership initiatives empower its Asian market expansion, marking a robust step in its business growth.
