Jan 15 (Reuters) - India's Aditya Birla Fashion and

Retail (ABFRL) will raise $500 million by selling

shares, including to U.S. investment firm Fidelity, the retailer

said on Wednesday.

ABFRL said it will raise $275 million by issuing preference

shares, split between the retailer's controlling shareholders

and Fidelity, and the remaining $225 million through a qualified

institutional placement.

The Birla family, which owns the biggest stake in ABFRL via

multiple entities, will buy shares worth $150 million through

one such entity at 317.45 rupees per share, a 17.5% premium to

the stock's last closing price.

Fidelity will buy shares worth $125 million at 272.37 rupees

each, just about a 1% premium.

The Birla family's stake in ABFRL will increase to 52.78%

from 49.25% after the deal, per a Reuters calculation based on

latest exchange data, while Fidelity will get a fresh 3.45%

stake.

ABFRL will hold an extraordinary general meeting on Feb. 13

to decide on the investment proposals, it said.

The fundraise comes ahead of ABFRL spinning off its top

money-making unit, Madura Fashion and Lifestyle, into a separate

listed entity that it said would improve ABFRL's financial

position.

Madura Fashion, which houses the 'Peter England', 'Louis

Phillippe' and 'Van Heusen' brands among others, accounts for

roughly 70% of ABFRL's revenue.

ABFRL's shares were up 0.8% at 272 rupees as of 12:52 p.m.

IST after initially rising 2% following the news. They have

risen about 28% since ABFRL announced the demerger in April last

year.