RIL shares in focus as KKR buys additional stake in Reliance Retail for Rs 2,070 crore

Shares of Reliance Industries Ltd (RIL) are in focus on Monday morning after the retail arm Reliance Retail Ventures Limited (RRVL) said global investment firm KKR, through an affiliate, will invest Rs 2,069.50 crore at a pre-money equity value of Rs 8.361 lakh crore. This would make RIL's retail subsidiary among the top four companies in India by equity value.

KKR’s follow-on investment will translate into an additional equity stake of 0.25 per cent 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 per cent 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.

Earlier, Qatar Investment Authority, through a wholly-owned subsidiary, invested Rs 8,278 crore into the RIL arm. That investment valued RRVL at a pre-money equity value of Rs 8.278 lakh crore.

QIA’s investment translated into a minority equity stake of 0.99 per cent in RRVL on a fully-diluted basis.

Reliance Industries recently suggested that several marquee global strategic and financial investors had expressed strong interest in Reliance Retail and that it would provided details in due course.

"RIL remained optimistic about its sustained growth in coming years with the retail segment anticipated to grow the fastest amongst all of RIL’s businesses in both, revenue and Ebitda terms. Reliance Retail now caters to more than 90 per cent of daily Indian household needs; and currently serves over 98 per cent of India’s PIN codes through integrated online and offline channels," Nomura India said on August 28.

In the grocery business, Reliance Retail sold more than 1.8 million tonnes of groceries in FY23. The company launched Campa Cola in FY23 -- Reliance Retail is scaling it up further in India and will expand it into Asian and African markets. The launch of JioMart on WhatsApp has led to sharp 9 times growth of JioMart customers on the platform since its launch in FY22, Nomura India noted.

RRVL, through its subsidiaries and associates, operates India's largest, fastest growing, and most profitable retail business serving 267 million customers with an integrated omnichannel network of over 18,500 stores and digital commerce platforms across grocery, consumer electronics, fashion & lifestyle, and pharma consumption baskets.

In a July noted, Nomura suggested that the recent move to clean up Reliance Retail’s shareholding structure by buying back minority shareholders was a step towards unlocking value in the retail business and that RIL could progress on that in the coming year.

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