Two more global funds Singapore’s GIC and US-based TPG together will invest Rs 7,350 crore into Reliance Retail Ventures Ltd (RRVL) to acquire around 1.6% stake in the company, Reliance Industries Ltd (RIL) said on Saturday.
GIC will invest Rs 5,512 crore to purchase 1.22% in the holding company of Reliance Retail while TPG Capital Asia fund will pick 0.41% of stake for Rs 1,837 crore, valuing RRVL before the investment at Rs 4.28 lakh crore.
The duo will take the number of international funds making a beeline to invest in the holding company of Reliance Retail to seven and the total foreign direct investment into the country’s largest retailer to nearly Rs 36,200 crore to purchase nearly 7.3% in the company.
In the last three weeks or so, half-a-dozen other global funds from Middle East to the US including Silver Lake, KKR, General Atlantic, Mubadala have already announced investing billions of dollars into Reliance Retail, that operates 12,000 brick-and-mortar stores and the Mumbai company in May had launched JioMart e-commerce venture to take on Amazon and Walmart-owned Flipkart.
On Thursday, RIL had announced Abu Dhabi’s sovereign fund Mubadala Investment Co. will invest Rs 6,247 crore in RRVL to pick a 1.4% stake investment in the entity.
A same set of private equity funds are extending their confidence in RIL’s retail venture after pumping billions of dollar into its telecom services provider Jio Platforms that earlier this year attracted $20 billion FDI by selling 33% stake in the company to ten global funds and four US tech giants of Google, Facebook, Intel and Qualcomm. However, Singapore’s GIC is the only new investor to invest in Reliance Retail that previously had not infused capital into Jio Platforms.
Otherwise, barring GIC all other funds that have announced investments in RRVL so far had also invested in Jio Platforms earlier this year.
RIL has offered stakes to all the Jio Platforms investors in a bid to raise about Rs 60,000-63,000 crore by selling a 15% stake in Reliance Retail, ET had reported last month. ET had also reported that while Intel and Qualcomm have declined to RIL’s offer to infuse funds in the retail business, Google and Facebook were expected to revert.
Global funds have reasons to replicate their investments in RRVL, as well as the country’s largest retailer, stands to gain substantially from the manifold potential upside in India’s $800 billion retail market that is expected in the coming decades. Retail is seen by many of the investors as a direct bet on India’s growing economy as the country is targeting to achieve a $5 trillion economy in the coming years from about $3 trillion at present and retailing accounts for a quarter of India’s overall annual output.
Earlier this year, Reliance Retail has agreed to acquire the country’s second-largest retailer Future Group that will brings in Rs 26,000 crore in additional sales to create a Rs1.89 lakh crore ($26 billion) retail empire spanning about 14,000 brick-and-mortar stores and the combine entity will be seven times bigger in terms of revenues than its nearest rival Avenue Supermarts, that runs D’Mart.
