Despite the Covid-19 pandemic and the resultant economic slowdown, India’s Reliance Industries is attracting high-profile investors for its businesses. After garnering over US$20 billion for its digital arm, global investors are now writing checks for its retail unit – Reliance Retail Ventures Limited.
The latest to do so is Abu Dhabi Investment Authority, which invests on behalf of the Abu Dhabi government. It has committed to invest 55.12 billion rupees ($749 million) to pick up a 1.2% stake at a pre-money equity value of 4.2 trillion rupees ($57.22 billion), according to Reliance. Last week, another Abu Dhabi-based sovereign wealth fund, Mubadala, picked up a 1.4 % stake in 62.47 billion rupees ($851 million).
Commenting on the investment, Hamad Shahwan Aldhaheri, executive director of the private equities department at ADIA, said, “Reliance Retail has rapidly established itself as one of the leading retail businesses in India and, by leveraging both its physical and digital supply chains, is strongly positioned for further growth.”
With the latest round of funding Reliance Retail has raised 377 billion rupees in the last four weeks, and the other investors include Silver Lake, KKR, General Atlantic, GIC and TPG.
Reliance is looking to sell a stake of around 15% in its retail venture to a clutch of foreign investors and would also induct a strategic investor into the company as the conglomerate looks to pivot from its core business of oil and petrochemicals to a technology-retail behemoth.
The company plans to uses these investments to strengthen its dominance in the retail market and will compete with Amazon and Walmart-owned Flipkart.
Reliance Retail is already India’s biggest brick-and-mortar retailer with roughly 12,000 stores. It runs supermarkets, India’s largest consumer electronics chain store, a cash and carry wholesaler, fast-fashion outlets and JioMart, an online grocery store. The retail behemoth had in August forged a $3.38 billion deal to acquire rival Future Group’s retail business.
India’s retail space continues to be dominated by mom-and-pop corner stores, popularly known as kirana stores. They enjoy a market share of nearly 90% and there are an estimated 12 million of them across the country. Of late, retail giants are increasingly teaming up with these stores to supply merchandise and also to help digitize their operations.
Reliance’s JioMart has tied up with Facebook-owned WhatsApp to offer its customers an online order-booking service for groceries. It works on an online-to-offline model where the customers can order online and the product is delivered from the local corner store.
Rivals Amazon and Flipkart are also working on similar tie-ups. As a result, these small stores are being transformed from pure brick-and-mortar entities to semi-digital businesses and in the process changing the character of the country’s $650-billion retail industry.