Reliance Industries Limited, aka RIL, is revving up its engine to begin another stake selling spree, but this time for its retail arm Reliance Retail Ventures Limited which operates JioMart.
Silver Lake Partners, one of the first US private equity giants which invested Rs 10,200 crores in Reliance Jio after Facebook, is all set to invest additional Rs 7,500 crore ($1 billion) in RIL’s retail arm for a 1.75% equity stake. On September 9th, RIL said that this particular investment values Reliance Retail Ventures Limited (“RRVL”) at a pre-money equity value of Rs 4.21 lakh crores ($55 billion approx).
The oil-to-telecom conglomerate is currently expanding its retail business with its O2O aka Offline to Online platform JioMart and thus is gearing up to raise investments from a posse of global investors.
There is no doubt Reliance Retail aims to give tough competition to rivals such as Amazon India and the Walmart-owned Flipkart in the home turf. Recently, the company acquired Kishore Biyani’s Future Group for Rs 24,713 crore crores which only goes further to show how serious RIL is about achieving its end goal.
As of now, JioMart skyrocketing at an incredible pace in terms of growth. RIL’s FY20 annual report stated how this new eCommerce venture of theirs has observed 4 times more orders than it was receiving in the pre-lockdown period.
This latest Reliance Retail investment from Silver Lake – one of the world’s largest tech investors – paints a very clear picture of how Reliance’s retail business, in the near future, is all set to lead the post-pandemic disruptive technology transformation in India.
Silver Lake’s track record of investments speaks for its reputation. The company has invested in some of the most successful and largest tech majors such as Twitter, Airbnb, Alibaba, Dell Technologies, ANT Financials, Alphabet’s Waymo and many more. Thus, this particular investment acts as a very strong endorsement when it comes to the capability of RIL’s tech and consumer business.
Additionally, it also signals the fact that RIL continues to attract global eyeballs when it comes to representing India’s truest potential in terms of growth led by technology.
Ambani’s conglomerate has a deep understanding of the entire scope of Indian markets and the future opportunities created by the rapid digitisation that’s been taking place in India. Thus, the Reliance Retail owned JioMart will definitely be able to reap its benefits.
Currently, this particular transaction between Reliance’s retail arm and Silver Lake is subject to regulatory and other customary approvals.
In order to bring the deal to a point of fruition, Morgan Stanley acted as the official financial advisor to Reliance Retail whereas Cyril Amarchand Mangaldas and Davis Polk & Wardwell pitched in as their legal counsels. For Silver Lake, Latham & Watkins and Shardul Amarchand Mangaldas & Co acted as legal counsels.
Reliance Retail, through JioMart, has begun a large scale digital transformation of small and unorganised merchants. It is committed to helping over 20 million small businesses by giving them easy access to the use of technology and a robust supply chain infrastructure.
Currently, another media report suggests that after Silver Lake’s investment, KKR & Co. might be gearing up to invest close to $1 billion Ambani’s retail arm. Thus, it’ll be interesting to see how that pans out as well. We will keep you updated. Until then, stay tuned.