Reliance Retail taps Facebook for stake sale

Our Bureau Mumbai | Updated on September 10, 2020

Social media giant may invest $2.8-5.6 b to pick up 5-10%

Facebook is in talks with Mukesh Ambani-backed Reliance Industries Ltd to pick 5-10 per cent stake in Reliance Retail Venture.

The discussions are at an advanced stage, according to sources aware of the development. Going by Reliance Retail’s valuation, post the Silver Lake deal on Wednesday, Facebook could invest $2.8-5.6 billion for the buy-in.

“It makes sense for Facebook because it is going big on the small and medium business segment in India. Reliance Retail has a significant network in that space, so there is a synergy between the two,” said a top source close to the Reliance camp.

Facebook did not reply to an email query.

The source added that discussions are on with private equity players, including KKR and the Abu Dhabi Investment Authority, but here the size of the stake sale will be similar to the Silver Lake deal. The American PE major on Wednesday announced a ₹7,500-crore investment in Reliance Retail for 1.76 per cent stake valuing the retail company at ₹4.21-lakh crore.

‘Amazon too in talks’

According to other media reports, Amazon could acquire 40 per cent stake for $20 billion. However, a source close to Reliance Retail said it was unlikely that Ambani would give such a large share to a single investor.

“Reliance Retail does not need any investor to teach it how to run retail business in India. The company needs investors who can add value. In this context, Facebook appears a good fit. Private equity players will be onboarded purely as investors,” the source said.

When contacted, a Reliance spokesperson said, “we would like to reiterate that as a policy, we do not comment on media speculation and rumours and we cannot confirm or deny any transaction which may or may not be in the works. Our company evaluates various opportunities on an ongoing basis. We have made and will continue to make necessary disclosures in compliance with our obligations under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 and our agreements with the stock exchanges.”

Arvind Singhal, Managing Director of management consulting firm Technopak, said, “I am not very clear about the strategic benefit to Facebook to partner with Reliance Retail, especially since FB is already a partner/investor in Jio Platforms. Any interest from FB in Reliance Retail may either be to maintain a strong relationship with Reliance and/or purely the financial attractiveness of the investment.”

(With inputs from Nandana James)

Published on September 10, 2020

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