After raking in multi-million deals for Jio Platforms Ltd, Reliance Industries Ltd (RIL) has invited all 13 investors to pump in money in Reliance Retail Ventures Ltd (RRVL). Jio Platforms has strategic investors such as Facebook Inc and Google Inc on board and roping in these global tech giants could give it a much-needed boost to take on multination giants like Amazon Inc and Walmart in India.
As coronavirus continues to wreak havoc in the Indian economy, Reliance Retail may choose to follow the Jio Platforms model, LiveMint reported citing people familiar aware of the talks. The prime reason for this is believed to be the restrictions under the foreign direct investment law, which prohibits FDI in multi-brand retail in India. So, RIL will most likely look for financial or strategic investors. This also goes well as per RIL Chairman Mukesh Ambani’s plan, who last month said Reliance Retail wanted to focus on inducting global investors in the next few quarters.
The stake sale in Reliance Retail will provide the company’s balance sheet a flexibility and help it reduce the debt. Of the RIL’s total debt of Rs 3.36 lakh crore, Reliance Retail has a total debt of Rs 4,618 crore.
Reliance Industries’ Jio Platforms has committed a total of Rs 1,52,056 crore for a combined 33 per cent stake in JPL since April this year, with the latest investment worth Rs 33,737 crore from global tech giant Google.
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Its other top investors are Vista, General Atlantic, KKR, Mubadala, TPG, L Catterton, Intel Capital, Silver Lake, Qualcomm Ventures and Facebook.
The development is significant since Mukesh Ambani-led company reportedly has already started early stages talks with American private equity (PE) firm Silver Lake to sell a 1.7-1.8 per cent stake for around Rs 7,500 crore. Silver Lake was also the first American private equity firm to invest in Jio Platforms, following Facebook’s investment in the company for a $5.7 billion stake.
Reliance Retail is aiming to sell about 10 per cent in new shares to raise $5.7 billion, Financial Times reported this week. The company also signed a mega-deal worth $3.38 billion to acquire the retail and logistics businesses of Kishore Biyani-led Future Group on August 29. The deal made Reliance Retail India’s largest retail chain and gave it control of around one-third of retail stores of the country.