Global investment firm KKR will invest Rs 5,500 crore into the retail business of Mukesh
Ambani, the second deal for India's richest man in the arm as he
looks to widen his lead over Amazon.
KKR's cheque values Reliance
Retail at a pre-money equity value of Rs 4.21 lakh crore.
Private equity giant Silver
Lake Partners was the first to sign a Rs 7,500-crore cheque
in Ambani's retail arm for a 1.75 percent stake. With two cheques in two weeks,
Ambani has raised a total of Rs 13,050 crore so for for his retail arm. KKR had
made a Rs 11,367 crore investment in Jio Platforms earlier this year.
KKR’s investment will translate into a 1.28% equity stake in
RRVL on a fully diluted basis. This is also the second investment by KKR in a
subsidiary of Reliance NSE 0.89 % Industries,
following a Rs 11,367 crore investment in Jio Platforms announced earlier this
year.
Reliance is looking to raise about Rs 60,000-63,000 crore by
selling a 15% stake in Reliance Retail to a clutch of foreign investors and
would also induct a strategic investor into the company. Saudi Arabia's Public
Investment Firm, Abu Dhabi-based Mubadala, Abu Dhabi Investment Authority, KKR
and L Catterton are likely to pick stakes, ET said in an earlier report.
“I am pleased to welcome KKR as an investor in Reliance
Retail Ventures as we continue our onward march to growing and transforming the
Indian Retail ecosystem for the benefit of all Indians. We look forward to
working with KKR’s global platform, industry knowledge and operational
expertise across our digital services and retail businesses,” Ambani said in a
statement.
Ambani has identified technology and retail as future growth areas in a pivot away from the energy businesses he inherited from his father, who died in 2002. Retail is the next frontier for the 63-year-old Indian tycoon, whose ambitions include creating a home-grown e-commerce giant like China’s Alibaba Group Holding Ltd.
KKR is making its investment from its Asia private equity funds. The transaction is subject to regulatory and other customary approvals. " Reliance Retail’s new commerce platform is filling an important need for both consumers and small businesses as more Indian consumers move to shopping online and the company offers tools for Kiranas to be a critical part of the value chain. We are thrilled to support Reliance Retail in its mission to become India’s leading omnichannel retailer,” said Henry Kravis, KKR Co-founder.
Reliance Retail — a unit of the energy-to-telecommunications conglomerate Reliance Industries Ltd. — runs supermarkets, India’s largest consumer electronics chain store, a cash and carry wholesaler, fast-fashion outlets and an online grocery store called JioMart. It reported 1.63 trillion rupees in revenue in the year through March 2020. The unit operates almost 12,000 stores in nearly 7,000 towns.
Reliance last month bought assets of debt-strapped rival Future Group for 247.1 billion rupees, almost doubling the footprint of its retail chains. The deal includes Future’s retail, wholesale, logistics and warehousing units. Shares of Reliance traded 1.69 per cent down in Tuesday's trade at 11:19AM (IST). Around 225,065 shares changed hands on the counter.
Sandip Ginodia , CEO
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