General Atlantic to pick up a 0.84% stake, valuing Reliance Industries Ltd’s retail arm at an equity value of ₹ 4.29 trillion
Silver Lake Partners, an existing investor in Reliance Retail Ventures, agrees to invest an additional ₹1,875 crore into the retailer
Private equity firm General Atlantic will invest ₹3,675 crore in Reliance Retail Ventures Ltd, the third big-ticket investment in the retail unit of India’s most valuable company in a span of three weeks.
General Atlantic will pick up a 0.84% stake, valuing Reliance Industries Ltd’s retail arm at an equity value of ₹ 4.29 trillion, the company said in a statement on Wednesday. The private equity company had invested ₹6,598 crore in Reliance Industries’ Jio Platforms unit in May.
Silver Lake Partners, an existing investor in Reliance Retail Ventures, also agreed to invest an additional ₹1,875 crore into the retailer, taking the private equity firm’s total investment to ₹ 9,375 crore for a 2.13% equity stake.
The latest transactions take the total fundraising by Reliance’s retail unit to ₹18,600 crore this month and set the stage for a three-way fight between the Mukesh Ambani-led company, Amazon India and Walmart Inc.-run Flipkart for a bigger share of the Indian consumers’ wallet.
As consumers make more purchases online because of the pandemic, Reliance Retail is trying to strengthen its digital presence with JioMart, pitting it directly against the local units of the two US retail giants.
Last month, Reliance Retail Ventures acquired the retail, wholesale, logistics and warehousing businesses of Kishore Biyani’s Future Group.
Reliance Retail has opted for an omnichannel approach, which would help the company sell to a wider customer base.
It is also working with kiranas to bolster its business-to-business, or B2B, sales.
“It is unlikely that Reliance Industries would be able to build everything on its own for its consumer-facing businesses. So the best approach is to either acquire or collaborate. These stake sales will help Reliance Industries build that acquisition muscle," an analyst with a foreign brokerage said, on the condition of anonymity.
Reliance Industries has over the past four years made 30 acquisitions to facilitate its expansion in the telecom and retail segments.
“All investments fall under five categories: telecom, retail, education, healthcare and agriculture. Despite buying majority stakes in most of these startups, Reliance Industries has left the control with the startups, which we think helps ensure a vibrant culture," BofA said in a 7 September note to clients.
The size of India’s retail market is expected to exceed $1 trillion in the next three to four years, according to a UBS report.
Online retail accounts for about 3.4% of total retail sales in the country.
With more than 12,000 stores across India, Reliance Retail’s next turf is the online segment.
JioMart, which has thus far been selling groceries through its website, will soon be adding fashion and electronics.
Analysts said more stake sales in the retail unit are in the offing.
Mint had on 5 September reported that Reliance Industries had offered all 13 financial and strategic investors of Jio Platforms the option to invest in Reliance Retail Ventures.
On 9 September, Silver Lake picked up a 1.75% stake in Reliance Retail Ventures for ₹7,500 crore, and on 23 September, global investment firm KKR and Co. invested ₹5,550 crore in the retailer for a 1.28% equity stake.
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