KKR to Invest $754 Million in Mukesh Ambani’s Retail Unit

KKR & Co. will buy a $754 million stake in Mukesh Ambani’s retail business as the Indian billionaire extends his fundraising spree that netted more than $20 billion for his technology venture this year.

The U.S. private equity group will hold a 1.28% stake in Reliance Retail Ventures Ltd., valuing India’s biggest retailer at 4.2 trillion rupees ($57 billion), the Mumbai-based group said in a statement Wednesday. The deal follows Silver Lake Partners’ $1 billion investment earlier this month in the retail unit controlled by Ambani’s refining-to-telecom conglomerate, Reliance Industries Ltd.

Ambani, 63, has turned his attention to the retail business in a bet on India’s billion-plus consumers as smartphones and the internet transform the way they shop and access services from education to health care. In the midst of the coronavirus pandemic, Jio Platforms Ltd., Reliance’s digital unit, sold a combined 33% stake to investors including Facebook Inc., Google and Intel Corp. this year.

“Reliance group wanted to bring in investors with a global foot print, retail expertise and existing relationship with Jio Platforms,” Sanjay Nayar, chief executive officer at KKR India Advisors Pvt. said in an interview Wednesday, adding that the preliminary deal discussions started about eight weeks back.

Shares of Reliance Industries rose almost 1% in Mumbai on Wednesday while the benchmark S&P BSE Sensex slipped 0.2%.

Like Silver Lake, KKR is a repeat investor in Reliance’s consumer sector companies as Ambani seeks to pivot away from the energy businesses he inherited from his father, who died in 2002. While Silver Lake paid $1.35 billion for a stake in Jio Platforms, KKR invested $1.5 billion in Reliance’s telecommunications and digital services arm.

KKR expects Reliance Retail to cover a lot of ground to further penetrate India with its billion-plus consumers.

“There is a lot of execution ahead in terms of opening more stores in the food and grocery, fashion and electronics segments and roping the small shop owners into the retail platform,” said Nayar. “I would say four to five years of execution, growth and build out are left.”

‘Best in Execution’

But KKR is relying on Reliance’s proven track record in implementing large scale projects to achieve the retail expansion. “Reliance group is the one of the best in execution,” he said.

Reliance is also said to have offered a $20 billion stake in its retail unit to Amazon.com Inc., a person familiar with the matter said this month. If successful, this would be the biggest ever deal for the American etailer as well as India.

Reliance Retail runs supermarkets, India’s largest consumer electronics chain store, a cash and carry wholesaler, fast-fashion outlets and an online grocery store called JioMart. It reported 1.63 trillion rupees in revenue in the year through March 2020. The unit operates almost 12,000 stores in nearly 7,000 towns.

Ambani’s success in luring investors to Jio Platforms and now his retail business has boosted his personal wealth. As shares of Reliance Industries rallied 49% this year, he has added about $26 billion to his net worth. With a fortune of $84.7 billion, he is now the world’s fifth-richest person, according to the Bloomberg Billionaires Index.

©2020 Bloomberg L.P.

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