Reliance Retail Ventures raises ₹7,500 crore from Silver Lake

Our Bureau Mumbai | Updated on September 09, 2020

KKR, Facebook, Amazon could be among potential future investors

Mukesh Ambani is back in talks with multiple investors including Facebook, KKR and Amazon, this time for selling equity in Reliance Retail even as PE major Silver Lake Partners on Wednesday announced a ₹7,500-crore investment into the retail venture for 1.76 per cent stake.

This is the third investment by US-based Silver Lake in RIL. The PE firm had earlier invested ₹10,201 crore in two tranches (in May and June) in Jio Platforms for a total stake of 2.08 per cent.

ALSO READ: Silver Lake to invest ₹5,655 crore in Jio Platforms

ALSO READ: Silver Lake to invest ₹ 4,546 crore more in Jio Platforms

Silver Lake’s investment in Reliance Retail values the company at ₹4.21-lakh crore. While this could set the stage for further stake sale, analysts said that they were expecting a higher valuation for Ambani’s retail business. “While this is 7 per cent lower than our implied Reliance Retail Ventures value, overall, the start of the stake-sale process is broadly a positive as it would allow for further cash inflows into the company though we doubt RIL would sell as large a stake in Reliance Retail as the 33 per cent in Jio Platforms it sold,” analysts at JP Morgan said in a report.

Reliance operates the country’s largest retail business, recording close to 640 million footfalls from its 12,000 stores. The company recently also announced the acquisition of Future Group’s retail portfolio across grocery and fashion and lifestyle. This acquisition, once complete, would add 1,300 stores to its current count of 800 in grocery and 440 in fashion and lifestyle to own a network of 2,400.

“Reliance Retail’s core retail revenues get a 33 per cent boost to $15 billion led by a 40 per cent increase in grocery and 95 per cent increase in fashion & lifestyle,” said analysts at Jefferies Equity Research.

Giving an indication of things to come, RIL Chairman and Managing Director Mukesh Ambani said: “We believe technology will be the key to bringing the much-needed transformation in this sector so that various constituents of the retail ecosystem can collaborate to build inclusive growth platforms.”

“The proposed divestment is credit positive as it will enable RIL to pursue further growth opportunities while maintaining its zero-net debt status. The deal also establishes a valuation for its retail arm and sets the stage for further stakes sales within the segment,” Sweta Patodia, analyst, Corporate Finance at Moody’s Investors Service, said.

ALSO READ: Reliance Retail acquires Future Group’s retail business for ₹24,713 crore

RIL share price rose over 2 per cent on the NSE after the Silver Lake deal. It ended up 2.68 per cent at ₹2,163.55.


Published on September 09, 2020

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