Reliance Retail, the retail venture of Reliance Industries, India’s largest conglomerate, has raised USD 1.3 billion from Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, for an equity stake of 2.04%, the company said Thursday.
This deal values Reliance Retail at a pre-money equity value of approximately USD 62.4 billion. The development comes almost a month after Reliance Retail raised over USD 5.1 billion from seven global investors by selling an 8.48% stake in the company’s retail arm.
“This transaction demonstrates PIF’s commitment to investing and partnering for the long-term with innovative businesses around the world that lead and transform their sectors,” Yasir Al-Rumayyan, Governor of PIF, said in a statement.
Mukesh Ambani, chairman and managing director of Reliance and the country’s wealthiest person, began Reliance Retail’s fundraising streak with Silver Lake’s USD 1 billion-check in the second week of September. Then KKR and General Atlantic came along, pumping in USD 755 million and USD 500 million, respectively.
In the weeks that followed, Abu Dhabi Investment Authority (ADIA), Abu Dhabi-based sovereign investor Mubadala, Singapore’s GIC, American VC firm TPG, put in USD 750 million, USD 850 million, USD 750 million, and USD 250 million in Reliance Retail, respectively. Meanwhile, co-investors of Silver Lake said they would invest an additional USD 255 million into the entity which took the aggregate investment by the Silicon Valley-based investment firm and its co-investors in Reliance Retail to USD 1.2 billion.
This is Ambani’s second fundraising spree. Prior to this, he raised USD 20.2 billion for Reliance’s digital arm Jio Platforms from 13 high-profile global investors including American tech giants Google and Facebook between April and July.
It is to be noted that except GIC, all other investors in Reliance Retail including the latest backer, PIF, have invested in Jio Platforms as well. Reportedly, SoftBank had also shown an interest in writing a check for Reliance Retail but was put on the waiting list by Ambani. GIC is the only Asian investor in Reliance so far.
Started in 2006, Reliance Retail has grown to become India’s largest retail venture offering groceries, electronics, apparel, and fashion and lifestyle goods. Along with operating chain of retail stores like Reliance Fresh, Reliance Digital, and Reliance Trends, it has over 40 subsidiaries and clocks close to 640 million footfalls annually in 12,000 stores.
In late August, Ambani acquired Indian conglomerate, Future Group’s retail and wholesale business, as well as the logistics and warehousing business for USD 3.35 billion. The deal currently awaits clearance from the Competition Commission of India. Meanwhile, last month Amazon challenged Reliance’s acquisition of Future Group’s retail business in Singapore International Arbitration Centre (SIAC). However, Reliance and Future group are expected to go ahead with the deal.
Investors are betting their risk capital on Reliance Retail’s ‘New Commerce’ strategy, which it says is a business opportunity worth USD 700 billion. Reliance hopes to digitize small and unorganized merchants through Jio’s point-of-sale machine in the back end. On the consumer side it connects these retailers with buyers through its recently launched e-commerce platform JioMart.
With Jio Platforms, Reliance aims to accelerate the digital transformation of billions of Indians and millions of small retailers by providing them internet, mobile network, devices, and a host of digital services.
The connecting link between Jio Platforms and Reliance Retail is JioMart. Reportedly, Reliance is planning to raise about INR 600-630 billion by selling a 15% stake in Reliance Retail. To that effect, it has offered stakes in its retail venture to all the backers of Jio Platforms.