General Atlantic To Acquire 0.84% Stake in Reliance Retail

The Indian conglomerate Reliance Industries (RIL) announced on Wednesday that the U.S. private equity firm General Atlantic plans to invest USD 498.31 Million for 0.84% stake. The latest investment in the Reliance Retail will value its subsidiary at USD 58.17 Billion.

General Atlantic had previously announced an investment of approximately USD 894 Million in June this year. “Reliance Retail’s strategy is unique, highly disruptive, and yet fully inclusive,” said Sandeep Naik, Managing Director and Head of India and Southeast Asia at General Atlantic. While Isha Ambani, the Director at Retail Retail said that the American investment company has tremendous experience in the retail space which was built by working with prominent consumer and retail companies.

Currently, Reliance has over 12,000 stores and is striving to expand its e-commerce platforms across India. In the FY20, Reliance Retail reported a turnover of USD 21.7 Billion and a net profit of USD 726.4 Million. Its business grew by 145.2% year-over-year. For the deal between General Atlantic and Reliance’s subsidiary, Morgan Stanley was hired as a financial advisor while Cyril Amarchand Mangaldas and Davis Polk & Wardwell were the legal counsels. In the past few weeks, Reliance Retail raised around USD 1.8 Billion from the American private investors’ KKR & Co and Silver Lake Partners.

“General Atlantic is thrilled to be backing Mukesh’s New Commerce mission to drive substantial positive change in the country’s retail sector, which goes hand-in-hand with his vision to enable a Digital India through the work of Jio Platforms,” Bill Ford, CEO of General Atlantic said in a statement. Moreover, he added that their company shares with Reliance’s ideology of power in the technology to foster growth.

RIL Is On the Fund Raising Spree

In the year 2020, Reliance Industries witnessed billions of dollars in investment from the behemoth of technology companies and private equity firms. For instance, Google invested USD 4.5 Billion for a 7.7% stake in Reliance Jio Platforms while Facebook injected USD 5.7 Billion for a 9.99% stake in the company’s arm. Meanwhile, Silver Lake acquired a 2.08% stake after infusing over 1.41 Billion in the Jio Platforms. Moreover, KKR invested USD 1.5 Billion for the stake of 2.32% in Jio Platforms.

The companies across the globe were struggling to keep their business running while RIL was approaching investors to gain a hands-on the most lucrative market. Since March, it has pumped around USD 20 Billion in its Jio Platforms. According to the reports from Reuters, Abu Dhabi state fund Mudabala Investment Co. is in advanced talks to invest around USD 1 Billion in the firm’s retail arm. The state fund had already invested USD 1.2 Billion in its Jio venture. A Reliance spokesperson didn’t deny or confirm on-going talks while added that the “company evaluates various opportunities on an ongoing basis.”

The Abu Dhabi-based investor is one of the biggest investors, managing around USD 240 Billion in assets. Mudabala’s move to invest in RIL comes after it realized that it has not invested enough in the Asia Pacific region. Meanwhile, RIL is witnessing series of investments, Japanese SoftBank had expressed interest in investing in the company but the deal couldn’t go any further. Reliance is aggressively seeking investments to compete against Amazon’s business in India.