Reports suggest that a subsidiary of Abu Dhabi Investment Authority (ADIA) has invested ₹ 5,512.50 crores in the retail arm of Reliance Industries Ltd known as Reliance Retail Ventures Limited. The company would invest in Reliance Retail Ventures Limited in return of 1.2 percent stake in the company.
During regulatory filing, the company said, “This investment values Reliance Retail Ventures Ltd (RRVL) at a pre-money equity value of ₹ 4.285 lakh crore. ADIA’s investment will translate into a 1.2% equity stake in RRVL on a fully diluted basis.”
RRVL has attracted a number of investments in recent times. The retail arm of Reliance Industries has now raised approximately ₹ 37,710 crores from global investors including Silver Lake, KKR, General Atlantic, Mubadala, GIC, TPG, and ADIA.
Hamad Shahwan Aldhaheri, executive director of the private equities department at ADIA had said, “Reliance Retail has rapidly established itself as one of the leading retail businesses in India and, by leveraging both its physical and digital supply chains, is strongly positioned for further growth.”
“This investment is consistent with our strategy of investing in market-leading businesses in Asia linked to the region’s consumption-driven growth and rapid technological advancement,” he added.
Mukesh Ambani, the managing director and chairman of Reliance Industries had said, “The investment by ADIA is a further endorsement of Reliance Retail’s performance and potential and the inclusive and transformational New Commerce business model that it is rolling out. We are delighted with ADIA’s current investment and continued support and hope to benefit from its strong track record of over four decades of value creation globally.”
The company also added that previously, another Abu Dhabi-based sovereign wealth fund Mubadala had also invested ₹ 6,247.5 crores for a 1.4 % stake in RRVL.
The company has also said, “Reliance Retail, through its New Commerce strategy, has started a transformational digitalization of small and unorganized merchants and is committed to expanding the network to over 20 million of these merchants. This will enable the merchants to use technology tools and an efficient supply chain infrastructure to deliver a superior value proposition to their own customers.”
Mukesh Ambani is the fourth richest man on the planet according to Bloomberg list and the richest man of India who has successfully built a telecom company in the country and is now is doing the same as he tries to grow his retail business. Reliance Retail Limited, a subsidiary of RRVL is India’s largest and fastest-growing retail chain. The retail unit attracts over 640 million footfalls in their 12,000 stores that are spread all over the nation.
For the year ended March 31, 2020, RRVL had reported a turnover of ₹ 162,936 crores and net profit of ₹ 5,448 crores. Reliance stock price has gained since the news of this investment deal came out.
Reliance had also acquired Future Group to help themselves grow their business. Although Amazon, the competitor in the retail business has sent a legal notice to promoters of Future Group for allegedly breaching a non-compete contract over the latter’s deal with Reliance Industries (RIL).
Amazon had bought a 49 percent stake in Future Coupons, which owns a 7.3 percent stake in Future Retail that operates in more than 1,000 stores under Big Bazaar, Fbb, Foodhall, and Easyday Club brands for ₹ 1500 crores. Amazon alleges that the Future has breached the agreements they agreed on during the deal.