Mukesh Ambani's Reliance Industries plans to float Rs 20,000-cr InvIT to monetise retail warehousing assets

Reliance Industries Ltd (RIL) is planning to implement a process under which the group can monetise the backend warehousing and logistics assets of its retail business by setting up an infrastructure investment trust (InvIT). According to a report in The Economic Times, Reliance Retail Ltd, a step-down subsidiary of RIL, has already set up the base for the proposed InvIT of its warehousing assets. Reliance Retail, which is the largest retailer by revenue, scale and profit, has registered a trust, Intelligent Supply Chain Infrastructure Trust, for the same.

According to NSE, an Infrastructure Investment Trust or InvITs can be defined as a collective investment scheme similar to a mutual fund, which enables direct investment of money from individual and institutional investors in infrastructure projects to earn a small portion of the income as a return.

According to the report, the company, led by billionaire Mukesh Ambani, is planning to float the new unit either as a privately placed or listed InvIT and has started working on its financials and legal aspect. Under Sebi norms, it will need at least five shareholders.

Besides the trust, RIL has also set up Intelligent Supply Chain Infrastructure Pvt Ltd, which will be looking into the management of the assets that will be under the new InvIT.

This is not the first time that RIL is trying to monetise its given assets by setting up InvIT. In 2019, it monetised its gas pipeline network, East West Pipeline, in a Rs 13,000-crore sale to India Infrastructure Trust, which is an InvIT sponsored by Canadian investor Brookfield.

The group also raised Rs 25,215 crore, via its telecom tower InvIT, from Brookfield and other investors in 2019.

Again in 2020, it got Rs 7,558 crore from Abu Dhabi Investment Authority and Saudi Arabia’s Public Investment Fund for a 51 per cent stake in Digital Fibre Infrastructure Trust, which was set up to utilise its fiber optic network assets.

The new trust

According to the report, the RIL’s memorandum of association filed with the Registrar of Companies shows that the new InvIT has been set up to construct, develop, acquire, provide, manage, carry on the business of storage, warehousing, supply chain, cold chain, logistics infrastructure and facilities.

RIL’s plan to monetise its warehousing and logistics assets in the sector has surfaced at a time when Reliance Retail has been aggressively growing its warehousing capacity.

The value of total assets that could be transferred to the InvIT could be around Rs 20,000-25,000 crore, the report said. More assets are likely to get added as they become operational.

The company profile

Reliance Retail has its presence spread across grocery, consumer electronics, pharmacy, fashion and lifestyle, with brands such as Reliance Fresh, Reliance Digital, Trends and Ajio.com. It has also entered into FMCG, and beauty vertical, Tira.

As per company details, Reliance Retail had a warehousing portfolio of 33.6 million sq ft, as per the Q3 financials of RIL.

The RIL subsidiary added about 11.1 million sq ft space in FY22, increasing its warehousing space to 22.7 million sq. ft.

In the last three years, it has grown threefold. Reliance Retail increased its store count to 17,225 at the end of December 2022, up from 14,412 a year ago, with retail floor space crossing 60 million sq ft, up from 40.6 million sq ft at the end of FY22.

Besides, RIL has a majority stake in Addverb Technologies, which offers warehouse automation solutions and robotic systems for automated material handling. The firm has been working with 5G robots used for bagging lines to warehouse storage location logistics, which won’t involve humans and will be fully automated.

Besides, RIL acquired Metro Cash & Carry India Pvt Ltd for Rs 2,850-crore acquisition that is supposed to help Reliance Retail Ventures Ltd (RRVL) expand its warehouse network for JioMart Kirana and B2C hypermart business, said sources quoted in the report.

Reliance Retail’s very own Reliance Market discontinued its services during the Covid-19 outbreak. The facilities were shut, but the infrastructure was converted into warehouses and fulfilment centres to support the kirana business.

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