Mukesh Ambani’s retail unit valued at $34 billion in share swap

Bloomberg Mumbai | Updated on December 26, 2019 Published on December 26, 2019

Mukesh Ambani. File photo   -  PAUL NORONHA

Share owners in Reliance Retail Ltd can exchange four shares for one of its listed parent Reliance Industries Ltd

A stock swap offer to help shareholders of billionaire Mukesh Ambani’s unlisted retail business monetize their investment has valued the unit at $34 billion.

Share owners in Reliance Retail Ltd can exchange four shares for one of its listed parent Reliance Industries Ltd, according to a so-called scheme of arrangement posted on the groups website. With the parents latest market capitalization at Rs 9.8 lakh crore, the share swap values the subsidiary at Rs 2.4 lakh crore, according to Bloomberg’s calculation.

Asia's richest man is scouting for investors for the profitable retail unit. The share swap, which will help Reliance Retail employees monetize their illiquid stock options, values the company at more than Tesco Plc, the United Kingdom’s (UK) biggest supermarket chain. Ambani has promised to slash the groups net debt zero to zero by March 2021 after an investment spree of $76 billion in the past five years, bulk of it on its massively disruptive telecom carrier.

We will induct leading global partners in these businesses in the next few quarters, and move toward listing of both these companies within the next five years, Ambani had told shareholders in August referring to the retail and telecom units.

For the year to March, Reliance’s organised retail revenue jumped 89 per cent to Rs 1.3 lakh crore in the year. The earnings before interest and taxes jumped 169 per cent to Rs 55.5 lakh crore, according to a company statement which did not specify a net income for the business.

Reliance Retail, with 10,901 stores across the country, runs India’s largest chain of neighbourhood supermarket stores and consumer electronics stores besides being the top wholesale supplier to nations army of small shopkeepers.

The valuation set by Reliance is double that of Avenue Supermarts Ltd, which runs India’s biggest supermarket chain. Tesco is valued at $32 billion.

Published on December 26, 2019
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