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Silver Lake picks 1.75% in Reliance Retail for 7,500 cr

Mukesh Ambani
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Mukesh Ambani

Highlights

Investment pegs RRVL valuation at `4.21 Lakh cr; Stage set for Ambani's battle with Amazon.com &Walmart Inc for dominance in the retail mkt

New Delhi: US private equity firm Silver Lake Partners will buy 1.75 per cent stake in billionaire Mukesh Ambani-run Reliance Industries Ltd's (RIL) retail arm for Rs 7,500 crore and may be followed by KKR & Co, an American global investment company. Silver Lake will invest Rs 7,500 crore in Reliance Retail Ventures Ltd (RRVL), a subsidiary of Reliance Industries, for a 1.75 per cent stake, the Indian firm said in a statement.

"Reliance Retail Ltd, a subsidiary of RRVL, operates India's largest, fastest growing and most profitable retail business serving close to 640 million footfalls across its about 12,000 stores nationwide," the statement said.

"This investment values RRVL at a pre-money equity value of Rs 4.21 lakh crore," it said. This marks the second billion-dollar investment by Silver Lake in a RIL subsidiary after the $1.35 billion investment in Jio Platforms announced earlier this year. The world's largest tech investor picking up a stake in Reliance Retail cements belief that the firm is set to lead a disruptive, technology-led transformation of the Indian retail sector particularly relevant in post-pandemic India. Reliance Retail Limited, a subsidiary of RRVL, operates India's largest, fastest-growing and most profitable retail business spanning supermarkets, consumer electronics chain stores, cash and carry wholesale business, fast-fashion outlets, and online grocery store JioMart. It operates almost 12,000 stores in nearly 7,000 towns.

The investment will add fire to Ambani's battle for dominance in the retail market that is also being eyed by Jeff Bezos' Amazon.com and Walmart Inc's Flipkart. In May, Reliance launched an online grocery delivery service JioMart. It has tied up with WhatsApp to connect customers with local kirana stores. After monetising Jio Platforms -- which houses the firm's telecom arm and digital ventures, the richest Indian Mukesh Ambani is roping in investors in the retail business. All the 13 investors in Jio Platforms have been offered a chance to explore investing in the retail unit, sources privy to the development said adding KKR may be next in line to make an investment.

KKR may invest about $1.5 billion, they said. Commenting on the Silver Lake deal, Sweta Patodia, Analyst, Corporate Finance, Moody's Investors Service, said, "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."

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