Second deal by Mukesh-Ambani-controlled Reliance Industries Ltd retail unit in as many weeks will help it widen lead over competitors such as Amazon and Walmart-owned Flipkart as India’s largest retailer.
American buyout firm KKR & Co will invest Rs 5,550 crore in Reliance Retail in exchange for a 1.28 percent stake, the second deal stitched up by the Reliance Industries Ltd (RIL) unit in as many weeks.
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 23.
Mukesh Ambani, Chairman and Managing Director of Reliance Industries, said, “I am pleased to welcome KKR as an investor in Reliance Retail Ventures as we continue our onward march to growing and transforming the Indian Retail ecosystem for the benefit of all Indians.”
Henry Kravis, Co-Founder and Co-CEO of KKR, said, “Reliance Retail’s new commerce platform is filling an important need for both consumers and small businesses as more Indian consumers move to shopping online and the company offers tools for Kiranas to be a critical part of the value chain. We are thrilled to support Reliance Retail in its mission to become India’s leading omnichannel retailer and ultimately to build a more inclusive Indian retail economy.”
Private equity giant Silver Lake Partners said on September 9 that it will invest Rs 7,500 crore in Reliance Retail, India’s biggest brick-and-mortar retail business, for a 1.75 percent stake.
RIL, an oil-to-telecom conglomerate, is expanding its retail business through acquisitions and lining up a scrum of global investors to take on rivals such as Amazon India and Walmart-owned Flipkart in India’s huge market. The company said in end August it would buy the retail and logistics businesses of Kishore Biyani’s Future Group in a deal valued at $3.38 billion, including debt.
In May, Reliance launched online grocery service JioMart. These events prove the Mukesh Ambani-controlled company has wind in its back in widening its lead over other competitors.
Reliance Retail is India’s largest retailer
Founded in 2006, Reliance Retail operates India's largest, fastest growing and most profitable retail business. Its footprint spans nearly retail stores in over 7,000 towns with 28.7 million sq ft of retail space and serving close to 640 million footfalls.
The latest investment by KKR, which has a long history of building leading global enterprises, 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.
This is also the second investment by KKR in a Reliance enterprise. In May, 2020, KKR said it will invest Rs 11,367 crore in Jio Platforms, the digital services platform of RIL.
KKR’s long history of investments
Founded in 1976, KKR has successfully investing in businesses in the technology sector, including BMC Software, ByteDance and GoJek through its private equity and technology growth funds. Since inception, the firm has invested over $30 billion (total enterprise value) in tech companies, and today the firm’s technology portfolio has more than 20 companies across the technology, media and telecom sectors. In addition, India has been a key strategic market for KKR with a history of investing in the country since 2006.
Reliance Retail’s vision is to galvanise 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.
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. Deloitte Touche Tohmatsu India LLP acted as financial advisor to KKR. Shardul Amarchand Mangaldas & Co. and Simpson Thacher & Bartlett LLP acted as legal counsel to KKR.Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.