Reliance Retail Raises Rs 7,500 Crore By Selling 1.75% Stake To Silver Lake
Customers stand outside a Reliance Fresh Ltd. store in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Reliance Retail Raises Rs 7,500 Crore By Selling 1.75% Stake To Silver Lake

Reliance Industries Ltd. sold stake to private equity firm Silver Lake Partners, this time in its retail unit, as India's largest firm by market value continues its fundraising blitz.

Silver Lake will invest Rs 7,500 crore in Reliance Retail Ventures Ltd. for a 1.75% equity stake in the holding company of India's largest retailer Reliance Retail Ltd. on a fully diluted basis, according to an exchange filing. The deal pegs the equity value of the company at Rs 4.21 lakh crore.

The pre-investment equity valuation in dollar terms comes to $58.55 billion

This will be Silver Lake's third investment in Mukesh Ambani-controlled oil-to-telecom company after it ploughed in nearly Rs 10,213 crore in its digital arm, Jio Platforms Ltd., for almost 2.08% stake in two separate deals. These were part of the Rs 1.5-lakh-crore capital-raising spree that saw companies like Facebook Inc. and Google LLP investing in telecom and digital assets of Asia's richest man, who is building a technology giant that offers data, content and commerce.

Ambani's retail unit will further increase dominance once acquisition of Future Group's retail unit is completed. Reliance Retail generated Rs 92,778 crore revenue from consumer electronics, fashion and lifestyle and groceries in the year ended March. Ambani had said at the parent Reliance Industries' annual general meeting that the company has approached strategic and financial investors for selling a stake in the retail unit.

Prior to the investment, after media reports suggested Silver Lake was in talks with Reliance Retail Ventures, CLSA had said unlike Jio Platforms, this deal valuation might be a bit underwhelming as it doesn’t bring in a new marquee strategic player and the fact that debt is no more seen as a concern. The research firm, that in a July report valued Reliance Retail at $70 billion, had said Reliance Industries may have exhausted its large near-term inorganic triggers even as organic earnings may struggle to deliver big surprises in the current environment.

Last week, Reliance Retail announced its plan to acquire Future Group’s retail and logistics business for Rs 27,513 crore. On completion of the acquisition, Reliance Retail will get Future Group’s 1,736 Big Bazaar and other stores covering close to 28.3 million square feet of retail area across various grocery and fashion segments.

Reliance Retail already has a total of 11,784 stores across consumer electronics, grocery and general merchandise and fashion & lifestyle. It reported a consolidated turnover of Rs 1,62,936 crore ($21.7 billion) and net profit of Rs 5,448 crore ($726.4 million) for the year ended March 31, 2020.

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