RIL likely to sell 8-10% more in Reliance Retail Ventures for expansion, stock market debut: Report

Mukesh Ambani-led Reliance Industries may sell another 8-10 per cent stake in its Reliance Retail Ventures Ltd (RRVL) to fund expansion, retire debt and prepare for its stock debut, a report said on Friday.

The stake sale will likely take place in tranches over 12-15 months and will be critical for the proposed IPO by the holding company of Reliance's retail operations, the Economic Times reported.

The stake sale plan comes a day after Qatar Investment Authority (QIA) said it will invest Rs 8,278 crore ($997 million) at an equity valuation of Rs 8.2 lakh crore. The investment proposal will make it the single largest investment by the sovereign wealth fund of Qatar in India.

The stake sale is crucial at this stage as the current valuation of Rs 8.25 lakh crore, RRVL's IPO size will be huge, which as per the report could be unmanageable.

Therefore, the company is thinking another 7-10 per cent equity dilution will make the IPO size manageable to ensure its success, company sources quoted in the report said.

As per Sebi's listing rules, the public shareholding, including those held by financial investors, of a company must be at least 25 per cent. At present, around 11 per cent in RRVL is owned by global investors, including QIA. The QIA investment of Rs 8,278 crore is for a 0.99 per cent stake.

Earlier, Reliance Retail had diluted 10.1 per cent stake and raised over $6 billion in 2020 from several financial sponsors and sovereign wealth funds, such as KKR, General Atlantic, TPG, Silver Lake, L Catterton, Abu Dhabi Investment Authority, Mubadala and Public Investment Fund of Saudi Arabia.

RIL owns less than 89 per cent and some shares are held by small investors.

RRVL, through its subsidiaries and associates, operates India’s largest retail business with a customer base of 267 million and an integrated omnichannel network of over 18,500 stores and digital commerce platforms across grocery, consumer electronics, fashion & lifestyle, and pharma consumption baskets.

RRVL reported a consolidated turnover of Rs 2.6 trillion ($ 31.7 billion) and a net profit of Rs 9,181 crore ($1.1 billion) in FY23.

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