Reliance Industries, owns 85 per cent of Reliance Retail Ventures, went through a fund raising spree in the middle of Covid to deverage its balance sheet that had ballooned to $20 billion on the back of its spending on its Jio mobile network, but raised over Rs 3.24 lakh crore from asset monestisation, PE funds and Gulf SWFs and followed it up with a $7bn rights issue to clear all its debts.
Qatar Investment Authority is in advanced negotiations with Reliance Retail to invest close to $950 million to $1 billion in the company, said people in the know. The Qatari sovereign fund is likely to invest at a $100 billion valuation, said people in the know.
This is almost double of the last round which was raised three years ago. Saudi Arabia’s Public Investment Fund invested $1.3bn for a 2.04 per cent stake in Reliance Retail Ventures in 2020, in a deal that valued the company then at about $62.4bn. Other shareholders include New York-based private equity firm KKR, TPG, and two Abu Dhabi sovereign investment funds. QIA did not invest in that round.
In recent times, QIA has becoming a proactive investor in India competing with peers from Abu Dhabi and Saudi Arabia. It has backed James Murdoch’s new media and education venture in India, Bodhi Tree besides backing start-ups like Byju’s, Rebel Foods and Swiggy.
The $100 billion valuation is lower than what the analysts at AllianceBernstein estimated in May that Reliance Retail was worth as much as $131bn. However, some like Ambit Capital recently estimated it at $57 billion while JM Financial pegged it a at $100 bn valuation.
Reliance Industries, owns 85 per cent of Reliance Retail Ventures, went through a fund raising spree in the middle of Covid to deverage its balance sheet that had ballooned to $20 billion on the back of its spending on its Jio mobile network, but raised over Rs 3.24 lakh crore from asset monestisation, PE funds and Gulf SWFs and followed it up with a $7bn rights issue to clear all its debts.
Reliance Retail, which is led by Mukesh Ambani’s daughter Isha Ambani announced its financial results for June quarter on Friday. Reliance Retail, the retail arm of Reliance Industries, reported a revenue of Rs 69,962 crore, which is 19.5 percent more than previous year's Rs 58,569 crore.
Reliance continues to strengthen its retail foray via aggressive store expansion, leveraging its omni- channel capabilities by steadily expanding its offline footprint, as well as extending JioMart to consumer electronics and fashion and lifestyle. Further, the company’s newer initiatives such as entry into FMCG and acquisition of Metro indicate that it is strongly focused on building a large portfolio of brands and strengthening the supply chain.
While organised retail and wholesale still account for only 10-15% of India’s overall fast-moving consumer goods (FMCG) sales, companies such as Reliance that control more than half the organised market are increasingly getting greater leverage over supplies. With more than 4,000 fashion and apparel stores, including brands such as Trends, Centro, Azorte and Fashion Factory, Reliance is also by far the market leader in the segment.
During 2022-23, Reliance Retail expanded its physical store network with over 3,300 new store openings, taking the total store count at the end of the year to 18,040 stores. Its gross revenue grew 30% from Rs 1.99 lakh crore. The company also scaled up supply chain infrastructure with an addition of 12.6 million sq ft of warehouse space during the year.
Reliance Retail has grown at 17% on a compounded annual rate over the last decade with consumer electronics expanding the fastest. However, in the past five years, growth has been majorly driven by fashion and lifestyle which expanded 43%, followed by groceries that grew 41%. Fashion contributes the highest to overall profitability with the widest margins at 24%.
Reliance Retail’s net profit rose 18.8 % in the first quarter of FY 2023-24, while revenue increased by 20.5% after the retailer saw highest ever footfalls at 249 million across formats. Reliance Industries’ retail division posted revenue of Rs62,559 crore in the April-June period, while net profit was Rs2448 crore.
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