Private equity giant KKR & Co. Inc, which recently struck its biggest Asia deal by investing in Reliance Industries Ltd’s digital unit, is now betting on the Mukesh Ambani-led conglomerate’s retail business.
KKR will invest Rs 5,550 crore (about $755 million) in Reliance Retail Ventures Ltd to pick up a 1.28% stake, RIL said in a statement Wednesday.
This investment values Reliance Retail Ventures at a pre-money equity valuation of Rs 4.21 trillion, RIL said.
The deal comes barely months after KKR in June invested $1.5 billion in RIL unit Jio Platforms Ltd for a 2.32% stake.
“KKR has a proven track record of being a valuable partner to industry-leading franchises and has been committed to India for many years,” RIL chairman and managing director Mukesh Ambani said.
KKR is the second US-based PE investor in Reliance Retail. Earlier this month, Silver Lake Partners invested 7,500 crore in the retail company. In May, Silver Lake had committed $747 million to Jio Platforms.
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’s new commerce platform is filling an important need for both consumers and small businesses as more Indian consumers move to shopping online and the company offers tools for kiranas to be a critical part of the value chain,” said Henry Kravis, co-founder of KKR.
Reliance Retail Ventures is 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 latest investment by KKR 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.
Deloitte Touche Tohmatsu India LLP acted as the financial adviser to KKR. Shardul Amarchand Mangaldas & Co. and Simpson Thacher & Bartlett LLP were the legal advisers for the said transaction.