India’s oil-to-telecom conglomerate Reliance Industries, owned by the country’s richest man, Mukesh Ambani, is on a fundraising spree for its retail arm, Reliance Retail Ventures, as it looks to pivot away from its legacy business of oil and petrochemicals.
The latest investor is Saudi Arabia’s sovereign Public Investment Fund, which will pick up a 2.04% stake in the company by signing a cheque for 95.55 billion rupees (US$1.3 billion) for a valuation of 4.5 trillion rupees ($60 billion). This is the largest investment so far in Reliance Retail and till now nine investors have collectively picked up a 10.5% stake for 472.65 billion rupees ($6.39 billion). The other global investors include Silver Lake, KKR, General Atlantic, Mubadala, Abu Dhabi Investment Authority, and Singapore’s GIC and TPG.
For the Saudi Arabian sovereign wealth fund this is the second investment in a Reliance group company. Earlier it had picked up a 2.32% stake in its digital arm Jio Platforms for 113.67 billion rupees ($1.53 billion). Reliance Industries has raised $20 billion for Jio Platforms, and prominent investors included Facebook and Google.
Welcoming the investment, Ambani said, “I welcome Public Investment Fund as a valued partner in Reliance Retail and look forward to their sustained support and guidance as we continue our ambitious journey to transform India’s retail sector for enriching the lives of 1.3 billion Indians and millions of small merchants.”
The Saudi fund’s governor, Yasir Al-Rumayyan, said: “We are pleased to be furthering our trusted partnership with Reliance Industries, the leading player in some of India’s most exciting sectors.”
Reliance Retail, India’s largest offline retail player, operates 12,000 stores across the country, including supermarkets, consumer electronics chain stores and fashion outlets.
It is now looking to expand its leadership to the online format by taking on Walmart-owned Flipkart and Amazon. As per the new strategy, the retail giant is moving to an omni-channel model by involving its brick-and-mortar outlets and its newly-launched e-commerce platform JioMart, which also connects millions of individually-owned small stores with consumers. JioMart is currently operational in 200 cities.
To add to its offline retail heft, Reliance Retail last month acquired the second-biggest player, Future Group’s retail, wholesale, logistics and warehouse business, for an enterprise value of 241 billion rupees ($3.26 billion). But the deal ran into rough weather after a suit was filed in the Singapore International Arbitration Centre by Amazon, which owns a stake in Future Coupons – an unlisted entity of Future Group.
Amazon contended that it has the first right of refusal to purchase the entire stake of Future Coupons, which owns about 7.3% of Future Retail. It had also barred Future Coupons from selling its assets to 15 companies, including Reliance Industries. The others include Walmart, Alibaba, Softbank, Google, Naspers, eBay, Target, Paytm, Zomato and Swiggy. The Singapore court has told Future Group not to proceed with the sale and await the outcome of the arbitration process.