Private equity giant Silver Lake Partners will invest Rs 7,500 crore in the retail unit of India’s Reliance Industries Ltd (RIL) in exchange for a 1.75 percent stake.
The investment values Reliance Retail at a pre-money equity value of Rs 4.21 lakh crore, RIL said in an exchange filing on September 9.
RIL, an oil-to-telecom conglomerate, is expanding its retail business and lining up a posse of global investors to take on rivals such as Amazon India and Walmart-owned Flipkart in India’s huge market.
The Reliance arm is India’s biggest brick-and-mortar retail business and its footprint spans across 11,806 retail stores in over 7,000 towns with 28.7 million sq ft of retail space. Reliance Retail, founded in 2006, said in end August that it would buy the retail and logistics businesses of Kishore Biyani’s Future Group in a deal valued at $3.38 billion, including debt.
Reliance Retail launched an online grocery service named JioMart in May and now sells a raft of items such as electronics, jewellery, apparel and vegetables, among others. It acquired British toy chain Hamleys last year, and also runs the outlets of global brands such as Burberry, Armani and Jimmy Choo, among others, in India.
RIL, controlled by India’s richest man, Mukesh Ambani, has raised more than $20 billion from a clutch of global investors including Facebook Inc by selling stakes in its Jio Platforms, its digital business. Silver Lake was the first US private equity firm to invest in Jio after the Facebook deal, pumping more than Rs 10,200 crore.
With the latest investment, Jio Platforms and Reliance Retail account for over Rs 9 lakh crore of RIL valuation.
The latest investment by Silver Lake, the world’s largest tech investor, in Reliance Retail underscores its clear belief that the RIL unit is set to lead a disruptive, technology led transformation of Indian retail sector particularly relevant in the post-pandemic India.
Silver Lake has a terrific track record of investing in some of the largest and successful tech companies globally such as Twitter, Airbnb, Alibaba, Dell Technologies, ANT Financials, Twitter, Alphabet’s Waymo and Verily, among others.
This investment is another strong endorsement of RIL’s tech and consumer business capabilities, disruptive business models and secular long-term growth potential. It further reaffirms RIL’s continuing attraction among global investors for best representing India’s vast tech-led growth potential, a deep understanding of the Indian markets, the rapid digitisation opportunity in the post-Covid world, and capabilities to bring cutting-edge technologies and tools such as AI, Blockchain, AR/VR, Big data into play for all Indians.
Commenting on the transaction with Silver Lake, Mukesh Ambani, Chairman and Managing Director, Reliance Industries, said, “I am delighted to extend our relationship with Silver Lake to our transformational efforts of building an inclusive partnership with millions of small merchants while providing value to Indian consumers across the country in the Indian retail sector. We believe technology will be key to bringing the much-needed transformation in this sector so that various constituents of the retail ecosystem can collaborate to build inclusive growth platforms. Silver Lake will be an invaluable partner in implementing our vision for Indian Retail.”
Egon Durban, Co-CEO and Managing Partner of Silver Lake, said, “We are pleased to deepen our relationship with Reliance with this investment. Mukesh Ambani and his team at Reliance have created an outstanding world leader in retail and technology through their courageous vision, commitment to societal benefits, innovation excellence and relentless execution. The success of JioMart in such a short time span, especially while India, along with the rest of the world, battles the COVID-19 pandemic, is truly unprecedented, and the most exciting growth phase has just begun. Reliance’s New Commerce strategy could become the disruptor of this decade. We are thrilled to have been invited to partner with Reliance in their mission for Indian Retail.”
The transaction is subject to regulatory and other customary approvals.
Morgan Stanley acted as financial advisor to Reliance Retail and Cyril Amarchand Mangaldas and Davis Polk & Wardwell acted as legal counsels. Latham & Watkins and Shardul Amarchand Mangaldas & Co acted as legal counsels for Silver Lake.
Reliance Retail Limited, a subsidiary of RRVL, operates India's largest, fastest growing and most profitable retail business serving close to 640 million footfalls across its ~12,000 stores nationwide.
Reliance Retail’s vision is to galvanize the Indian retail sector through an inclusive strategy serving millions of customers by empowering millions of farmers and micro, small and medium enterprises (MSMEs) and working closely with global and domestic companies as a preferred partner, to deliver immense benefits to Indian society, while protecting and generating employment for millions of Indians.
Reliance Retail, through its New Commerce strategy, has started a transformational digitalization of small and unorganised merchants and is committed to expanding the network to over 20 million of these merchants, helping them benefit from the use of technology tools and efficient supply chain infrastructure to deliver a superior value proposition to their own customers.Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd