General Atlantic has become the third US-based private equity investor, after KKR & Co. Inc and Silver Lake Partners, to bet on billionaire Mukesh Ambani-led Reliance Industries Ltd’s retail unit.
The PE firm will invest Rs 3,675 crore ($497.6 million) in Reliance Retail Ventures Ltd to pick up a 0.84% stake, RIL said in a statement on Wednesday.
This investment values Reliance Retail Ventures at a pre-money equity valuation of Rs 4.28 trillion, RIL said.
“We look forward to leveraging General Atlantic’s extensive expertise at the intersection of technology and consumer businesses, and two decades of experience investing in India,” said Ambani, RIL’s chairman and India’s richest man.
In a separate statement on Wednesday, RIL said co-investors of Silver Lake will invest an additional Rs 1,875 crore in Reliance Retail.
This brings the total investment by Silver Lake and its co-investors in the retailer to Rs 9,375 crore. This will translate into a 2.13% stake in the company on a fully diluted basis.
All three PE firms are also among the investors who backed Reliance’s digital unit, Jio Platforms Ltd, earlier this year. General Atlantic had committed $870 million to Jio Platforms in May.
“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," said Bill Ford, CEO at General Atlantic.
RIL, India’s biggest company by market value, has been expanding its retail business as well as its telecom and digital services operations as it diversifies away from its core energy business. Last month, the conglomerate agreed to acquire Future Group’s retail business in a multi-billion-dollar deal. It also recently bought a majority stake in online pharmacy Netmeds for Rs 620 crore.
Reliance Retail Ventures is the holding company of Reliance Retail Ltd, India’s largest bricks-and-mortar retailer. It reported a consolidated turnover of Rs 162,936 crore and a net profit of Rs 5,448 crore for the year ended March 31, 2020.
In June, RIL said it had become net-debt free through stake sales in Jio Platforms and a rights issue worth $7 billion. At the time, Ambani said strong investor interest in Jio Platforms and RIL’s consumer businesses would help the two units move towards a public listing in the next five years.
The investment by General Atlantic is subject to customary and regulatory approvals.
Morgan Stanley, Cyril Amarchand Mangaldas and Davis Polk & Wardwell acted as the financial and legal advisers to Reliance Retail.
Shardul Amarchand Mangaldas & Co. and Paul, Weiss, Rifkind, Wharton & Garrison LLP were the legal advisers for the transaction.
*This article has been updated to include details of investment by Silver Lake's co-investors in Reliance Retail.