RIL made $3 billion acquisitions in three years to boost offerings

Mumbai: Reliance Industries Ltd (RIL) has made acquisitions worth $3 billion in the past three years to boost product offerings of its subsidiaries—Reliance Jio Infocomm Ltd and Reliance Retail Ltd, among others.

Last month, RIL’s wholly owned subsidiary Reliance Strategic Business Ventures Ltd (RSBVL) acquired a 51.78% stake in robotics and artificial intelligence company Asteria Aerospace Pvt. Ltd for ₹23.12 crore. Asteria develops drone-based solutions to provide intelligence from aerial data for military and industrial applications. It had received India’s first drone licence in October 2019.

In December, RSBVL also acquired a 85% stake in NowFloats Technologies Pvt. Ltd for ₹141.63 crore with a proposal to make further investments of up to ₹75 crore, subject to achieving agreed milestones.

The investments are expected to be completed by December 2020, after which the shareholding of RSBVL will increase to 89.66% of the equity share capital of Nowfloats.

According to a 16 December Morgan Stanley Research report, of the $3 billion invested for acquisitions across verticals, RIL has put in $566 million in media and education, $194 million in retail, $1.2 billion in telecom and internet firms, $100 million in digital and $391 in the chemicals and energy space.

“Technology is not RIL’s forte so inorganic growth or acquisitions is the only way for RIL to enter, and then expand in these segments. These acquisitions reflect RIL’s ambition to further disrupt the consumer space (telecom and retail) through the use of technology,” said an analyst tracking RIL, requesting anonymity.

At RIL’s 42nd annual general meeting (AGM) in August, chairman and managing director Mukesh Ambani underscored that almost every emerging technology trend is present in the Jio fold—be it artificial intelligence (AI), internet of things (IoT), blockchain, online multiplayer gaming, multi-party videoconferencing, augmented reality (AR), virtual reality (VR) and mixed reality (MR). So the acquisitions are only an extension of RIL’s ambitions.

While in 2019 RIL had acquired 83% in Grab for $30 million, 100% in Hamleys for $89 million and 83% in Easygov for $10 million, in 2018, it had signed deals with Saavn music app, Eros International Plc., NetraDyne Inc., Karexpert Technologies, Vakt Holdings, Indiavidual Learning, Radisys Corp., Kai OS Technologies and SkyTran Inc., among others.

The spending spree also stems from RIL’s aspiration to be among the top 20 companies in the world. And, along with refining and petrochemicals, Reliance Jio and Reliance Retail, could play a part in achieving the feat.

According to a retail survey by Bank of America Securities, RIL’s telecom venture has helped improve its perception for consumer services. The survey indicates that the perception of RIL’s consumer services has improved after the launch of Jio with 66% users considering it as a more consumer-friendly brand.

“We believe this bodes well for Reliance’s consumer ambitions of trying to garner 50% of total EBITDA to come from consumer business in the future,” BofA Securities said in a report on 17 December 2019.