Silver Lake invests Rs 7,500 cr in Mukesh Ambani's Reliance Retail for 1.75% stake

After investing in Jio Platforms earlier this year, the world's leading tech investor Silver Lake Partners (SLP) will invest Rs 7,500 crore ($1 billion) in Mukesh Ambani's Reliance Retail Ltd, a Reliance Industries Ltd subsidiary, for a 1.75 per cent equity stake on a fully diluted basis. This investment values Reliance Retail at a pre-money equity value of Rs 4.21 lakh crore. The investment by Silver Lake marks another big boost for RIL, which last month acquired Kishore Biyani's Future Group for Rs 24,713 crore.

It is also the second large investment by Silver Lake in an RIL subsidiary after the infusion of Rs 10,200 crore in Jio Platforms Ltd earlier this year. "We believe technology will be key to bringing the much-needed transformation in this sector so that various constituents of the retail ecosystem can collaborate to build inclusive growth platforms. Silver Lake will be an invaluable partner in implementing our vision for Indian Retail," Mukesh Ambani, Chairman and Managing Director, Reliance Industries, said.

With the current investment, both Jio Platforms and Reliance Retail now account for over Rs 9 lakh of RIL's valuation. Notably, Reliance Retail, which is a subsidiary of Reliance Retail Ventures Ltd, operates India's largest retail business service via its 12,000 stores nationwide. A RIL statement said that Reliance Retail's "vision is to galvanise the Indian retail sector by working closely with farmers and micro, small and medium enterprises (MSMEs), and global and domestic companies".

Also read: Reliance Retail-Silver Lake deal talks: 10 key points

As part of the RIL-Future Group deal signed last month, Reliance Retail Ventures Ltd will acquire the retail and wholesale business and the logistics and warehousing business from the Future Group, which would make it the undisputed leader of the retail business in India. Future Retail owns BigBazaar that sells everything from groceries to cosmetics and apparel, and Future Lifestyle Fashions that operates fashion discount chain Brand Factory. Reliance will also take over Future Consumer, which sells food, home and personal care products.

Meanwhile, Silver Lake also has a terrific track record of investing in some of the largest and successful tech companies globally including the likes of Twitter, Airbnb, Alibaba, Dell Technologies, ANT Financials, among others. It has over $40bn billion in combined assets under management.

Speaking about the deal, Egon Durban, Co-CEO and Managing Partner of Silver Lake, said Mukesh Ambani and his team have created an outstanding world leader in retail and technology. "The success of JioMart in such a short time span, especially while India, along with the rest of the world, battles the COVID-19 pandemic, is truly unprecedented."

Also read: Mukesh Ambani on shopping binge; Reliance buys into 23 firms in 3 years

He said Reliance's New Commerce strategy could become the disruptor of this decade.

Morgan Stanley acted as financial advisor to Reliance Retail and Cyril Amarchand Mangaldas and Davis Polk & Wardwell acted as legal counsels. Latham & Watkins and Shardul Amarchand Mangaldas & Co acted as legal counsels for Silver Lake.

RIL has also invited others JPL investors, including Facebook and Google, to pump in money in Reliance Retail Ventures. Analysts believe roping in these global tech giants could give RIL a much-needed boost to take on multinational giants like Amazon Inc and Walmart in India. RIL has reportedly already started preliminary negotiations with Facebook and private equity fund KKR for investment in Reliance Retail. The two companies also own stakes in RIL's Jio platforms. 

Meanwhile, RIL share is trading 0.19 per cent or Rs 3.20 up at Rs 2,113.25 on the National Stock Exchange as compared the previous day close of Rs 2,107.10. 

Also Read: Reliance Retail buys Future Group's retail business for Rs 24,713 crore