After raising $25b for Jio, Reliance is starting its funding run for its retail unit

Reliance Industries Limited has started a new investment run following a US$25.7 billion funding spree for its digital services arm Jio Platforms. Now, the company is raising billions of dollars for its retail arm Reliance Retail as it goes head to head with Jeff Bezos’ Amazon.

Established in 2006, Reliance Retail is one of the largest retailers in India. It has more than 11,700 retail stores as of April 2020, covering more than 7,000 towns and cities in the country. With its “new commerce” strategy, it aims to digitize India’s small and unorganized merchants, with a large goal of plugging 20 million stores online.

In October, the company acquired its rival Future Group’s retail business in a US$3.38 billion deal. Amazon, which had acquired a 49% stake in a promoter group entity – Future Coupons – of Future Group’s retail business, sent a legal notice in response to the acquisition, saying it breaches their non-compete contract.

See Also: Amazon vs. Reliance Retail: First shots fired in the Indian ecommerce battle

Silver Lake kicked off the retail giant’s investment round, after saying it will pour US$1 billion into the RIL subsidiary for a 1.75% stake on a fully diluted basis early in September.

The deal valued Reliance Retail – which reported a consolidated turnover of US$21.7 billion and a net profit of US$726.4 million for the year ended March 31, 2020 – at US$57 billion pre-money.

“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,” said RIL chairman and managing director Mukesh Ambani.

A slice of India’s digital future

The US-based investment firm also invested in Jio Platforms earlier this year, investing a total of US$1.4 billion in the company along with undisclosed co-investors.

Following Silver Lake is KKR, which announced later in September that it was set to invest US$755 million in Reliance Retail. The investment, which translates to a 1.28% stake in Reliance Retail, puts the company’s valuation at US$57 billion, said RIL.

Like Silver Lake, KKR also previously invested in Jio Platforms, accounting for US$1.5 billion of the digital services firm’s total raised.

Singapore sovereign wealth fund GIC and global private equity firm TPG Capital also looked to grab their share of the rising retail pie, investing US$752 million and US$250 million for a 1.22% and a 0.41% stake in the company, respectively, early last month.

SOURCES