If you think that the richest person in India has raised enough to take Reliance Industries Limited to new heights, it’s time to surprise yourself. The company is willing to sell as much as 40% stake of its retail arm Reliance retail ventures Ltd to eCommerce behemoth Amazon Inc for as much as $20 billion.
The talks are in the early stage but Amazon is actively engaging in the negotiation that clearly hints that the eCommerce major is potentially eyeing to have a slice of Reliance Retail, which has become the talk of the town for the last few weeks.
According to Bloomberg, a person familiar with the development has revealed some jaw-dropping details about the ongoing negotiation, albeit on the condition of anonymity.
if the talk ends on a positive note, it would be the biggest investment deal in India to date. Besides, it will also bring the world’s richest person and Asia’s richest person together dominating the eCommerce and retail market in India.
Amazon’s investment in Reliance Retail would also skyrocket the growth of Reliance Industries Limited. Just like Jio, Mukesh Ambani has now on an investment spree for its retail arm. After the recent news of a $1 billion investment from Silver Lake, one of the largest investment firms, the shares of RIL jumped to a record high, making RIL the first company in India to touch the market cap of $200 billion.
Walmart vs Amazon In India?
Amazon’s investment in Reliance Retail makes perfect sense considering its arch-rival Walmart is actively strengthening its presence after the acquisition of Flipkart. After acquiring the poster boy of Indian eCommerce revolution Flipkart for a $20.7 billion valuation two years ago, now the US retail giant has shifted gears to counter the growing influence of Reliance Retail in the offline market.
The retail market in India is quickly heading for consolidation after the recent acquisition of Future Group by Reliance recently, and Flipkart’s acquisition of Walmart’s wholesale business in India.
For Amazon, there could be no partner better than Reliance to be a part of the retail revolution India is expected to witness in the next few years.
It’s quite unlikely that Mukesh Ambani would settle with the investment from Amazon. The company is reportedly in talks with KKR & Co for a $1 billion investment in Reliance Retail. Rumours are also making rounds that L Catterton is also considering investing in Reliance Retail.
On what terms the Reliance Amazon deal gets materialises, is anybody’s guess at the moment. But one thing is certain – Jeff Bezos is known for hard negotiation and with Ambani sitting at the other side of the table, it would be interesting to see the outcome of the negotiation.
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