Private equity firm General Atlantic will invest ₹Rs 3,675 crore in Reliance Retail Ventures Ltd, the third major investment in the company’s most valuable retail unit in India in three weeks.
General Atlantic will collect a 0.84% stake, valuing the retail arm of Reliance Industries Ltd at an equity value of ₹ 4.29 trillion, the company said in a statement Wednesday. The private equity firm had invested ₹Rs 6,598 crore at Reliance Industries’ Jio Platforms unit in May.
Silver Lake Partners, an existing investor in Reliance Retail Ventures, also agreed to invest a ₹Rs 1,875 crore into the retailer, bringing the total investment of the private equity firm to ₹ Rs 9,375 crore for an equity stake of 2.13%.
The latest transactions bring 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.-led Flipkart over increased stake in the wallet of Indian consumers.
As consumers make more purchases online due to the pandemic, Reliance Retail is trying to strengthen its digital presence with JioMart, directly pitting it against the local units of the two US retail giants.
Last month, Reliance Retail Ventures acquired Future Group’s retail, wholesale, logistics and warehousing businesses from Kishore Biyani.
Reliance Retail has opted for an omnichannel approach, which would help the company sell to a broader customer base.
It is also working with Kiranas to strengthen its business-to-business or B2B sales.
“Reliance Industries is unlikely to be able to build everything on its own for its consumer-oriented businesses. Therefore, the best approach is to acquire or collaborate. These stake sales will help Reliance Industries build that acquisition muscle, “said an analyst at a foreign brokerage, on condition of anonymity.
Reliance Industries has made 30 acquisitions in the last four years to facilitate its expansion into the telecommunications and retail segments.
“All investments fall into five categories: telecommunications, retail, education, health and agriculture. Despite buying majority stakes in most of these startups, Reliance Industries has left control to the startups, which we believe helps ensure a vibrant culture, “BofA said in a Sept. 7 note to newsgroups. customers.
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 represents approximately 3.4% of total retail sales in the country.
With more than 12,000 stores across India, the next territory for Reliance Retail is the online segment.
JioMart, which has been selling groceries through its website so far, will soon add fashion and electronics.
Analysts said more stake sales in the retail unit are coming.
mint It reported on September 5 that Reliance Industries had offered the 13 financial and strategic investors of Jio Platforms the option to invest in Reliance Retail Ventures.
On September 9, Silver Lake acquired a 1.75% interest in Reliance Retail Ventures for ₹7.5 billion rupees, and on September 23, global investment firm KKR and Co. invested ₹Rs 5,550 crore in the retailer for a 1.28% equity stake.
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