Saudi Arabia’s PIF invests ₹9,555 crore in Reliance Retail

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Billionaire Mukesh Ambani-led Reliance Industries Ltd’s retail arm on Thursday raised ₹9,555 crore from Public Investment Fund (PIF) of Saudi Arabia, taking total fundraise in last two months to ₹47,265 crore.

PIF will take a 2.04% stake in Reliance Retail Ventures Ltd (RRVL), the Indian firm said in a statement.

The investment values RRVL, the retail arm of Reliance Industries Ltd, at a pre-money equity value of ₹4.58 lakh crore.

This is second investment by the Saudi Arabian sovereign wealth fund in an Ambani firm. It had previously picked up 2.32% stake in Jio Platforms, the digital and telecom arm of Reliance, for ₹11,367 crore.

“This investment will further strengthen PIF’s presence in India’s dynamic economy and promising retail market segment,” the statement said.

“The transaction is in line with PIF’s strategy as a leading global investor with a proven track-record of investing in innovative and transformative companies globally and develop strong partnerships with leading groups in their respective markets,” it added.

India’s retail sector is one of the largest in the world and accounts for over 10% of its gross domestic product (GDP) which presents meaningful growth potential.

Mr. Ambani, Chairman and Managing Director of Reliance Industries, said, “We at Reliance have a long-standing relationship with the Kingdom of Saudi Arabia. PIF is at the forefront of the economic transformation of the Kingdom of Saudi Arabia."

“I welcome PIF as a valued partner in Reliance Retail and look forward to their sustained support and guidance as we continue our ambitious journey to transform India’s retail sector for enriching the lives of 1.3 billion Indians and millions of small merchants.”

“We are pleased to be furthering our trusted partnership with Reliance Industries, the leading player in some of India’s most exciting sectors. This transaction demonstrates PIF’s commitment to investing and partnering for the long-term with innovative businesses around the world that lead and transform their sectors,”  said Yasir Al-Rumayyan, Governor of PIF.

“This investment further demonstrates PIF’s commitment to generating returns for the Saudi people and driving the economic diversification of Saudi Arabia,” he said.

Reliance Retail Limited, a subsidiary of RRVL, operates India’s largest, fast-growing retail business serving close to 640 million footfalls at its 12,000 stores across the country.

Reliance Retail’s vision is to galvanise the Indian retail sector through its new commerce strategy, serving millions of customers by empowering millions of micro, small and medium enterprises (MSMEs), the Indian firm said.

RRVL had previously raised ₹37,710 crore from leading global investors including Silver Lake, KKR, General Atlantic, Mubadala, GIC, TPG and Abu Dhabi Investment Authority (ADIA).

The investments equip Reliance Retail with funds to compete in both offline and online formats. The investments come as the country’s retail sector prepares for the festival season and would help Reliance to launch an assault on rivals such as Walmart-owned e-commerce company Flipkart and Amazon.

Reliance Retail Ltd operates India’s most profitable retail business spanning supermarkets, consumer electronics chain stores, cash and carry wholesale business, fast-fashion outlets and online grocery store JioMart.

It operates about 12,000 stores in nearly 7,000 towns, across core categories of grocery, consumer electronics and apparel.

The new funding comes weeks after Reliance acquired the retail, wholesale, logistics and warehouse business of Future Group for an enterprise value of ₹24,173 crore to consolidate its dominant market positioning in offline retail.

The deal, however, is being challenged by U.S. e-commerce giant Amazon, which had taken a stake in Future’s unlisted entity.

Earlier Reliance raised an unprecedented ₹1.52 lakh crore for Jio Platforms, the group’s telecom and digital services company, from investors such as Facebook, Intel and Google.

The oil-telecom-to-retail conglomerate intends to divest minority stakes in its digital and retail businesses, and hold initial public offerings for each within five years.

Retailers are expecting to pick up in sales during the current festive season.

Reliance Retail in May this year launched JioMart, an e-commerce venture, to connect mom-and-pop stores, called Kirana, with consumers. In July, JioMart was serving 4,00,000 orders a day and is currently operational in 200 cities.

Reliance Industries has sold a 10.52% stake in the retail unit since September 9 for a total of ₹47,265 crore.

With this, Jio Platforms and Reliance Retail account for over ₹9 lakh crore of Reliance Industries Ltd’s valuation.

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