Silver Lake's Rs 7,500 cr investment in Reliance Retail sets stage for more

Along with Jio, retail contributes 35 per cent to RIL's consolidated EBITDA
Reliance Industries (RIL) on Wednesday said US private equity (PE) firm Silver Lake would invest Rs 7,500 crore in its subsidiary Reliance Retail Ventures (RRVL) for a 1.75 per cent stake, valuing the company at Rs 4.2 trillion. This came a day after Silver Lake had led a Rs 3,750-crore investment round in edtech firm Bjyu’s.

Earlier this year, Silver Lake invested Rs 10,202 crore in Jio Platforms, RIL’s digital services platform.

The fund infusion by Silver Lake in Reliance Retail, however, sets the stage for more stake sales by the company, including one to PE firm KKR, also an investor in Jio Platforms. KKR may put up to $1.5 billion (or Rs 11,250 crore) in Reliance Retail as it seeks a slice of the country’s largest retailer, sources told Business Standard.

RIL had given the option to investors in Jio Platforms to consider backing Reliance Retail as it sought to unlock value, following the acquisition of Future Group’s retail assets last week, persons in the know said.

Investors such as the Abu Dhabi Investment Authority and Mubadala could be next in line.


A Reliance spokesperson, however, said it could not comment on market speculation and rumours. “Our company evaluates various opportunities on an ongoing basis. We have made and will continue to make necessary disclosures in compliance with our obligations under Sebi (Securities and Exchange Board of India) and our agreements with the stock exchanges,” the spokesperson said.

Sources said Reliance Retail could look at offloading a 25-30 per cent stake to a combination of private equity firms and tech giants such as Facebook, Google, and Intel, presenting telecom and retail as a “potent force” in India's consumption story.

Along with Jio, retail contributes 35 per cent to RIL’s consolidated earnings before interest, taxes, depreciation, and amortisation (Ebitda), Mukesh Ambani, RIL’s chairman, had said at the firm’s annual general meeting in July.

Reliance has offloaded nearly 33 per cent in Jio Platforms to 14 investors for Rs 1.52 trillion between April and June, emerging as the only firm in the country to go in for a massive monetisation exercise at the height of the lockdown.

“We will induct global partners and investors into Reliance Retail in the next few quarters,” Ambani, 63, had said at the AGM, adding that his firm was also scaling up JioMart, its new commerce venture.


JioMart, which went live across 200 cities in May, had crossed 250,000 in daily orders, with the number growing each day, Ambani said. Since then, daily orders have crossed the 400,000-mark, sector experts said.

While the average order value on JioMart, according to analysts, was pegged at Rs 500 per transaction, Ambani has been looking to raise this number by taking the platform into areas beyond grocery, including categories such as electronics, fashion, pharma and health care. The company would also deepen its ties with Whatsapp, which is owned by Facebook, to boost the reach of JioMart.

The need to work “closely” with WhatsApp, said experts, came as Amazon and Walmart-backed Flipkart ramped up their grocery services in the country. Both Amazon and Flipkart have been wooing kiranas aggressively in the last few months, giving the latter an additional avenue to reach consumers and do business.

Apart from kiranas and small merchants, Reliance Retail would also look to work closely with farmers to source more food items from them, as it seeks to scale up its farm-to-fork operations.

“We sell more fruits and vegetables than any other organised retailer in the country. The bond with tens of thousands of farmers has helped us source over 80 per cent of our fresh fruits and vegetable directly from farmers,” Ambani said.

At the same time, Reliance Retail would continue to push its presence into small towns and cities, Ambani said, adding more outlets in these places.

“More than two-thirds of our nearly 12,000 stores are operating in Tier II, III and IV towns and we will continue to keep our attention there,” he said.

With the addition of Future Group stores, the number of outlets under Reliance Retail will now go up to over 13,500 stores, giving it control of a third of the organised retail market in India.

 



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