Reliance ‘to offer $20-billion stake in retail arm to Amazon’

Bloomberg Bengaluru | Updated on September 10, 2020

Reliance Retail Limited, a subsidiary of RRVL, operates India's largest retail business serving close to 640 million footfalls across its 12,000 stores nationwide.

If it goes through, it could be biggest ever deal in India, and turn ‘rivals’ into ‘allies’

Mukesh Ambani’s Reliance Industries Ltd is offering to sell a roughly $20-billion stake in its retail business to Inc., according to a person with knowledge of the matter.

“Amazon has held discussions about investing in the conglomerate’s Reliance Retail Ventures Ltd. unit and has expressed interest in negotiating a potential transaction,” the person said. Mumbai-based Reliance Industries is willing to sell as much as a 40 per cent stake in the subsidiary to Amazon, the person said, asking not to be identified because the information is private.

A deal, if successful, would not only create a retail behemoth in India but will also turn Jeff Bezos and Asia’s richest man from rivals into allies in one of the fastest-growing consumer markets in the world. At $20 billion, the deal would be the biggest ever in India as well as for Amazon, according to data compiled by Bloomberg.

Reliance shares on a high

Shares of Reliance Industries extended gains and touched an all-time high after the Bloomberg News story. The stock surged 4.2 per cent as of 12:08 p.m. in Mumbai. The Indian rupee rose as much as 0.5 per cent to 73.1588 per dollar on expectations of more capital inflows.

In India, the deal could be Amazon’s way of acknowledging that it needs a locally-entrenched partner with a strong on-the-ground presence. For Amazon, Reliance would provide a brick-and-mortar component to its ambitions in a country where online purchasing still accounts for a minuscule share of an estimated $1-trillion retail market.

“Amazon hasn’t made any final decision on the size of its potential investment, and talks could still fall apart,” the person said. A representative for Amazon declined to comment.

“As a policy, we do not comment on media speculation and rumors,” a Reliance spokesman said in an e-mailed response to Bloomberg News. “Our company evaluates various opportunities on an ongoing basis. We have made and will continue to make necessary disclosures in compliance with our obligations.”

A deal with Amazon would give further credence to Ambani’s ambitions to create an e-commerce giant for India akin to China’s Alibaba Group Holding Ltd. Reliance Retail already lured about $1 billion from Silver Lake Partners, while U.S. private equity firm KKR & Co. is in advanced talks to invest at least $1 billion, and L Catterton is also considering investing, Bloomberg News reported on Wednesday.

Replicating Jio fund-raising

The investment in Ambani’s retail ventures comes after he raised $20 billion selling stakes in his technology venture — Jio Platforms Ltd — to investors including Facebook Inc. and Google. The billionaire appears to be seeking to repeat that fund-raising strategy with his retail business.

Reliance Retail — a unit of the energy-to-telecommunications conglomerate Reliance Industries — runs supermarkets, India’s largest consumer electronics chain store, a cash-and-carry wholesaler, fast-fashion outlets and an online grocery store called JioMart. It reported ₹1.63 trillion rupees ($22 billion) in revenue in the year through March 2020. The unit operates almost 12,000 stores in nearly 7,000 towns.

Published on September 10, 2020

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