KKR to invest Rs 2,070 cr in Reliance Retail to increase stake to 1.42%

Reliance Industries Ltd's wholly-owned subsidiary Reliance Retail Ventures Limited on Monday said that global investment firm KKR, through an affiliate, will invest Rs 2,070 crore into RRVL to increase its stake to 1.42%. This investment values RRVL at a pre-money equity value of Rs 8.36 lakh crore, which makes it among the top four companies by equity value in the country.

KKR’s follow-on investment will translate into an additional equity stake of 0.25% in RRVL on a fully-diluted basis. This, combined with its stake from its investment of Rs 5,550 crore in RRVL in 2020, will take its total equity stake in RRVL to 1.42% on a fully-diluted basis. The previous fund-raise round by RRVL in 2020 from various global investors of an aggregate amount of Rs 47,265 crore was done at a pre-money equity value of Rs 4.21 lakh crore.

Founded in 1976, KKR has approximately $519 billion in assets under management as of June 30, 2023. KKR’s follow-on investment in RRVL furthers its relationship with Reliance Industries Limited. In addition to its investment in RRVL, KKR is also an investor in Jio Platforms Limited, the telecom unit of  Reliance Industries Limited. 

Isha Mukesh Ambani, Director, Reliance Retail Ventures Limited, said: “We are
pleased to receive continued support from KKR as an investor in Reliance Retail Ventures Limited. We highly value our deepening partnership with KKR, and their latest investment in RRVL after their previous investment further reinforces their strong belief in RRVL’s vision and capabilities. We look forward to continued engagement with KKR and to benefit from their global platform, industry knowledge and operational expertise, in our journey towards
driving transformation of the Indian retail sector.”

Joe Bae, Co-CEO, KKR, said: “We are pleased to extend our relationship with Reliance Retail Ventures Limited. Throughout our investment period in Reliance Retail, we have been impressed by the company’s vision and extensive work to empower retailers across Indiathrough digitalization, as well as by its resilience and performance in spite of the pandemicand other disruptions. We look forward to continuing to work alongside the Reliance Retail team to support the company’s mission to build a more inclusive Indian retail economy.”

Gaurav Trehan, Head of Asia Pacific Private Equity and Head of India, KKR, added, “Reliance Retail is a true corporate leader and innovator in India, and its differentiated model has the potential to digitalise and transform the country’s retail industry. We are pleased to have the opportunity to continue collaborating with this team and pursue the growth opportunities ahead.”

KKR’s investment comes primarily from its Asian Fund IV. The transaction is subject to regulatory and other customary approvals.

Morgan Stanley acted as financial advisor to Reliance Retail Ventures Limited and Cyril Amarchand Mangaldas and Davis Polk & Wardwell acted as legal counsels.

The investment marks growing interest in Mukesh Ambani's retail operations that stretch from groceries to electronics, and include foreign partnerships with brands such as Jimmy Choo, Marks & Spencer and Pret A Manger. It has more than 18,000 stores and also competes with Amazon and Walmart's Flipkart.

In 2020, Reliance Retail raised $5.71 billion by selling a 10.09% stake to investors including KKR, the Saudi Public Investment Fund, General Atlantic and the United Arab Emirates' Mubadala.

That year, KKR had invested Rs 5,550 crore in Reliance Retail. Ambani recently said the 2020 fundraising valued the business at around $52 billion, and "in less than three years, the valuation of retail has almost doubled."

Reliance Retail reported a consolidated net profit of Rs 9,181 crore for the financial year that ended in March 2023, on revenue of Rs 2.6 lakh crore.

Since last year, Reliance has been acquiring dozens of small grocery and non-food brands as it tries to build a consumer business with annual sales of $6 billion within five years to challenge foreign giants like Unilever.