Reliance Retail Ventures Ltd, which raised $ 1 billion from Silver Lake Partners on Wednesday, is poised to attract additional investments worth $ 5 billion from KKR & Co., Mubadala Investment Co. and Abu Dhabi Investment Authority (ADIA), two people directly aware of the negotiations said.
California-based private equity fund Silver Lake, an investor in Reliance Industries Ltd’s Jio Platforms unit, acquired a 1.75% stake in Reliance Retail Ventures for Rs 7.5 billion, valuing the company at 4.21 trillion. rupees or $ 57 billion.
“Discussions with KKR, Mubadala and ADIA are at an advanced stage, and more existing investors can follow suit as Reliance continues to speak with outside investors,” said one of the two people cited above.
KKR, Mubadala and ADIA are slated to invest around $ 1 billion each, the people cited above said on condition of anonymity.
The new round of investments in the retail business will give parent Reliance Industries more firepower to take on strong rivals such as Amazon and Walmart-owned Flipkart for supremacy in India’s organized retail space, where Reliance Retail aims. to grab significant market share through an omnichannel approach, analysts said.
Some of them, however, said that Silver Lake’s valuation of Reliance Retail Ventures is significantly discounted from what they had estimated.
“A value of $ 57 billion is slightly disappointing compared to what the markets are setting at the moment,” JP Morgan said in a note to investors on Wednesday, adding that this is 7% lower than its implied value. Reliance Retail, which the investment bank had set up. $ 65 billion.
Mint had reported on September 5 that Reliance Industries had offered investors in Jio Platforms the option to invest in its retail unit as well.
“Mubadala has had discussions to invest in Reliance Retail. Investors in Jio Platforms have been offered the opportunity to invest in the retail business with an attractive valuation, which they are considering. They could consider a ticket size similar to or smaller than their investment in Jio Platforms; those details have not been finalized, ”said the first person quoted above. Mubadala invested $ 1.2 billion in Jio Platforms in June.
Emails sent to Mubadala, ADIA and KKR did not get a response as of press time.
Last month, Reliance Retail Ventures agreed to acquire Future Group’s retail, wholesale, logistics and warehousing businesses for Rs 24,713 crore.
“There is room for RIL to extract operational efficiencies and improve profitability with lower capital costs. The integration of the supply chain / logistics business could also strengthen RIL’s retail backend and perhaps also its new business plans, ”said Citi Research in a report dated 9 September. With an eye toward the fast-growing e-commerce segment, Reliance Industries launched its online food and grocery business in 200 cities through JioMart in May.
Reliance Retail Ventures operates the largest retail business in India with 12,000 stores across the country. It is the parent company of Reliance Retail Ltd and Reliance Brands. The latter operates joint ventures with international brands.
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