By entering a binding term sheet with Masaba owner Masaba Gupta, ABFRL will purchase a 51% stake in the entity.
The financial terms of the transaction have not been disclosed, but local media has reported it to be worth around Rs900m ($12.1m).
Following the acquisition, ABFRL will use the digital direct-to-consumer (D2C) channel to expand the brand to its young and digitally influenced consumer base.
The company will also expand its product offerings in the apparel, accessories, beauty and other lifestyle categories.
It aims to generate annual revenues of Rs5bn over the next five years.
ABFRL managing director Ashish Dikshit said: “Masaba is a young, effervescent brand with a refreshing and innovative take on every lifestyle category.
“This partnership is also an important step in building our presence in the fast-growing beauty and personal care segment.
“This fits in well with our overall strategy to partner with India’s topmost designers to build a portfolio of distinctive and aspirational home-grown brands across the fashion and lifestyle categories.”
House of Masaba founder Masaba Gupta said: “The House of Masaba already has established a strong foothold among the youth with a robust digital-first strategy and the tie-up with ABRFL will strengthen this position, making the brand future-ready.
“With this partnership, I look forward to creating immersive and collaborative experiences for our target audiences who highly engage in virtual mediums today and are driving the industry’s evolution to the Metaverse.”
The deal is subject to the signing of a definitive agreement, the meeting of closing conditions and any relevant statutory approvals.
It is expected to close in the next two to three months.
Management consulting firm Wazir Advisors acted as sole advisor to ABFRL and Masaba in relation to the transaction.