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After Jio, Gulf wealth funds eye Reliance retail

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Indian billionaire Mukesh Ambani’s offline and online retail business has now become the latest cynosure for global investors and sovereign wealth funds weeks after his digital services firm Jio Platforms has raised Rs1.52  trillion from overseas.

From the Gulf, state investment funds from the UAE and Saudi Arabia, including Mubadala Investment, Abu Dhabi Investment Authority, and Saudi Arabia’s Public Investment Fund (PIF), are also reportedly in negotiations with Reliance Retail Ventures Ltd (RRVL), the holding company of offline and online retail business of Reliance Industries (RIL). Other overseas investors seeking a stake in India’s booming retail spectrum include L Catterton, KKR, Carlyle Group and SoftBank Group Corp. Most of these suitors have already invested in RIL’s Jio Platforms.

RRVL seeks to offload up to 15 per cent stake to private equity players and strategic investors to raise up to Rs800 billion, while reserving the largest allocation of 40 per cent for Amazon.com Inc.

The Indian retail giant, which has 12,000 stores across the country, recently announced its acquisition of retail, logistics and warehousing business of Future Group for Rs 247.13 billion. Reliance also signaled it would pick up 13 per cent stake in Kishore Biyani’s remaining business under Future Enterprises Ltd.

According to informed sources, some of these global funds  are in an advanced stage of negotiations valuing RRVL at Rs4.2 trillion based on  private equity giant Silver Lake’s acquisition of 1.75 per cent stake for Rs75 billion. Jio Platforms, in which 13 investors altogether picked up 32.97 per cent stake, is valued at Rs4.91trillion.

Western and Indian media reports said while Mubadala is weighing an investment of about $750 million in Reliance Retail, Adia is pondering a similar investment and PIF could funnel as much as $1.5 billion, according to Financial Times, citing people familiar with the matter.

Sources close to RIL said Ambani is offering to sell a roughly $20 billion stake in the retail business to the US tech giant, which could be equivalent to as much as a 40 per cent holding. A deal, if successful, would be the biggest ever in India as well as for Amazon, according to data compiled by Bloomberg.

Responding to media queries, a RIL spokesperson said the group evaluates various opportunities on an ongoing basis. “In light of a high incidence of speculative media queries and incorrect and ex parte media articles relating to purported capital transactions into Reliance Industries or our group companies, we would like to reiterate that as a policy, we do not comment on media speculation and rumours and we cannot confirm or deny any transaction which may or may not be in the works.

Reliance Retail posted Rs 1.63 trillion revenue in 2019-20, compared to Rs 340 billion in 2016-17.

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