Asia News Oct 01

Reliance Retail ropes in General Atlantic as investor

PE firm's second investment in a Reliance subsidiary follows $873m  investment in Jio Platforms in May; chairman Ambani said to be seeking to offload a fifth of the company

Reliance Retail ropes in General Atlantic as an investor
Reliance Industries signboard. Photo: Reuters.

(ATF) It's happening again.

India's Reliance Industries said on Wednesday that private equity firm General Atlantic will invest $498.31 million for a 0.84% stake in its retail arm, Reliance Retail Venture (RRVL), extending the fund-raising streak of its chairman Mukesh Ambani.

The billionaire is reportedly trying to to offload 15%-20% in RRVL to strategic and tactical investors to raise as much as $11 billion.

The deal not only underscores growing investor interest in the company's expansion plans as it diversifies from its mainstay oil-and-gas business. It also brings in yet another round of patient capital that's in no hurry to extract returns or profits.

That's just as well because neither will come easy for RRVL, according to experts; delivering on the promise of returns on capital and profits in retail is complex,

Retail involves physical merchandise, which in turn involves an efficient supply chain and huge infrastructure, as well as satisfying the multiple demands of a diverse population like India's, experts said.

Reliance is being seen as a formidable rival to Amazon and Walmart's Flipkart as they battle for market dominance. Reports also emerged Tuesday that Walmart may grab up to $25bn investment in the $113bn Tata Group too, as the salt-to-steel behemoth courts investors for its digital platform.

READ MORE: Ambani offering stakes in Reliance Retail, sources say

Reliance, which in May launched an online grocery service, operates around 12,000 bricks-and-mortar stores.

Ambani said Reliance would leverage General Atlantic's "extensive expertise at the intersection of technology and consumer businesses" to expand its new commerce venture, tying neighbourhood stores for online deliveries of groceries, apparel and electronics.

With the latest investment from General Atlantic — which has also invested in Airbnb, Slack and Uber — Reliance has now raised around $2.3bn for its retail arm. General Atlantic is also an investor in Reliance's digital business Jio.

More queuing up

After the General Atlantic deal, Ambani may be lining up private equity investors TPG and Mubadala for RRVL, according to a report by Business Today (BT).

The publication reported that TPG may invest around $700 million-$800 million. Abu Dhabi state fund Mubadala Investment and Carlyle may join the bandwagon too, BT also reported.

Earlier reports said offers from Carlyle and SoftBank had been put onto a waiting list because of strong interest from investors.

The General Atlantic announcement sent shares of Reliance Industries, already the country’s most valuable company, up by 1% on Wednesday, although it gave up about half those gains by the close.

  • With reporting by Reuters and Business Today

READ MORE: Reliance offers India’s growth story to its strategic and tactical investors

asia