The recent Rs 37,710 crore worth private equity deals in Reliance Retail Ventures Ltd (RRVL) has helped Reliance Industries (RIL) to mount up its net cash on books, but the investors believe that the magical charm is missing in the retail deals. "The market has been expecting a Facebook-like or Google-like deal in RRVL. That expectation is vanishing now," said an analyst with a foreign bank.
Based on the March debt numbers, RIL has been able to turn to a net cash company after investments worth Rs 1,89,765 crore in Jio Platforms Ltd (JPL) and RRVL. In addition, RIL executed Rs 53,125 crore rights issue in June and realised 25 per cent of the issue value. The oil-4G-retail conglomerate had a net debt of Rs 1,61,035 crore in March.
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"The market believes that RIL has not been able to stitch together big deals in RRVL as it did in Jio Platforms Ltd (JPL). That's why the share price hasn't moved up much in the last three months," said a stock market analyst. The share price of RIL, which crossed Rs 2,000 three months ago, has reached 52-week high of Rs 2,369 in mid-September, but fell to Rs 2,122 as on Wednesday.
Sources earlier said that RRVL, the holding company of offline and online retail businesses of RIL, wanted to offload 15-20 per cent stake to private equity players and strategic investors to raise up to Rs 80,000 crore. But it has been able to conclude Rs 37,710 crore deals with private equity giants like Silver Lake, General Atlantic, KKR, Mubadala, GIC, TPG and ADIA, by selling 8.48 per cent stake.
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In JPL, Facebook and Google took 17.72 per cent of the 32.97 per cent offloaded shares. There were media speculations that e-commerce giant Amazon might pick up a sizeable stake in RRVL. But Amazon is fighting a case against Future Group's sale deal with RIL. Amazon had slapped a legal notice on Future Group, alleging that the retailer's Rs 24,713 crore asset sale to RIL violated its agreement with the e-commerce giant. Amazon owns 49 per cent stake in one of Future's unlisted firms, Future Coupons Ltd, with the right to buy into flagship Future Retail after a period between 3 and 10 years. Future Coupons owns 7.3 per cent stake in Future Retail.
While Jio Platforms is valued at Rs 4.91 lakh crore, according to the recent private equity deals, RRVL is valued at Rs 4.21 lakh crore. Thirteen investors altogether picked up 32.97 per cent stake in JPL at Rs 1.52 lakh crore.
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Reliance Retail posted Rs 1.63 lakh crore revenue in 2019-20, compared to Rs 34,000 crore in 2016-17. The earnings before interest and tax (EBIT) went up to Rs 8,263 crore as against Rs 784 crore in this period.