Continuing with its fund-raising streak in the retail business, Reliance Industries (RIL) is selling a £ 624.8 million stake to Mubadala Investment Company, Abu Dhabi’s sovereign wealth fund. The deal will translate into a 1.4% stake in Reliance Retail Ventures and will be the first Middle Eastern investment in the RIL subsidiary.
Mubadala, with a $229-billion portfolio, will be the fourth investor in the retail unit after General Atlantic, KKR and Silver Lake in the recent few weeks. These funds together have agreed to put in £2.48 billion, valuing Reliance Retail at £43 billion. The multiple transactions reinforce RIL’s consumer business to be the most sought after investment destination for global funds scouring for deals in a pandemic-disrupted world.
Reliance Retail is Mubadala’s second investment in an RIL unit after it invested £909.4 million in the Indian company’s digital and telecom services arm Jio Platforms. The four investors in the retail business are the same parties who have invested in Jio Platforms.
Jio Platforms raised £15.2 billion from 13 investors - two strategic players and 11 US and Middle Eastern funds. The financial investors of Jio Platforms have been given an opportunity to invest in Reliance Retail, which is in the midst of rolling out its ‘new commerce’ strategy. This strategy covers combining Reliance’s physical store network (RIL has announced the acquisition of India’s second-largest retailer Future Group) with its fledgling e-commerce play. It also involves millions of mom-and-pop stores as last-mile delivery agents to take on larger online rivals Amazon and Flipkart in the country’s $800- billion retail market.
More financial investors are expected to be part of RIL’s retail unit, which plans to go for an IPO in the next few years. The listing could give the retail business a higher valuation and investors an opportunity to exit from the outfit.
Meanwhile, Digital Fibre Infrastructure Trust, which owns the optic fibre assets of Jio Platforms, is raising £1.47 billion from institutional investors, it said in a filing with markets regulator Sebi. The trust, sponsored by an RIL arm, is selling 1.47 billlion units at Rs 100 apiece via a private placement. It also plans to borrow £2.5 billion from two RIL companies. The money will be used to lower debt related to the telecom business, the trust said in its filing. The trust had borrowings of £ 8.72 billion as on March 31, 2020.
