Reliance Retail will acquire the South Asian licences of UK-based Superdry.

MUMBAI: Reliance Retail Ventures will pay 40 million pounds to purchase the ailing I-JK-based Superdry brand and related trademarks in three Asian countries.

The Superdry brand, trademarks, and other intellectual property assets encompassing India, Sri Lanka, and Bangladesh will be transferred to a new entity in which Reliance Retail's indirect subsidiary, Reliance Brands Holding I-JK, would control 76% and Superdry Plc will keep 24%.

Reliance Retail's relationship with Superdry dates back to 2012, when the former acquired the I-JK-based clothier's India franchise rights. According to a filing with the London Stock Exchange, Superdry will invest around 10 million pounds in the new entity, which will be offset by the 40 million pounds received from Reliance Retail.

Superdry's intellectual property assets encompassing the three South Asian areas accounted for around 1.8% of total sales in the fiscal year ending April 30, generating approximately 11 million pounds in revenue and 2.6 million pounds in operating profit, according to the company.

According to Superdry, the agreement with Reliance Retail will also involve intellectual property rights for its new designs. It thinks that the acquisition would give its brand with the "greatest chances" in South Asia, allowing it to "concentrate on building its brand and generating sales in its more established areas, where it has the most experience."

Reliance Retail, owned by billionaire Mukesh Ambani, has over 18,000 outlets in India, offering over 50 distinct fashion brands. In India, it also holds the intellectual property rights for the Gas and Iconix brands. Iconix represents 23 brands, including Ed Hardy, London Fog, Umbro, and Hydraulic.

Julian Dunkerton and James Holder founded Superdry after visiting Tokyo in 2003. The arrangement with Reliance Retail would also assist the British firm enhance its liquidity, strengthen its balance sheet, and support its continuing working capital requirements as part of its recovery strategy, according to the company.