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US Private Equity firm KKR to invest Rs 5,550 crore in Reliance Retail for 1.28% stake

Other investors in Jio Platforms include Facebook, Google, Silver Lake, private equity groups Vista and General Atlantic and Abu Dhabi’s sovereign wealth fund Mubadala.

US Private Equity firm KKR to invest Rs 5,550 crore in Reliance Retail for 1.28% stake

The investment by KKR will give an additional boost to the Ambani's battle for dominance in the retail market. (Photo: IANS)

Reliance Industries Ltd. and Reliance Retail Ventures Ltd. (RRVL) on Wednesday announced that US private equity firm KKR & Co will invest Rs 5,550 crore to buy a 1.28 per cent stake in RRVL as the Mukesh Ambani-run conglomerate extends fundraising spree that has already netted more than $20 billion.

“KKR will invest Rs 5,550 crore into Reliance Retail Ventures Ltd (RRVL), a subsidiary of Reliance Industries. This investment values Reliance Retail at a pre-money equity value of ₹ 4.21 lakh crore. KKR’s investment will translate into a 1.28% equity stake in RRVL on a fully diluted basis. This marks the second investment by KKR in a subsidiary,” the Indian firm said in a statement.

The latest investment in RRVL comes roughly two weeks after US private equity firm Silver Lake Partners agreed to buy 1.75 per cent stake in the venture for Rs 7,500 crore.

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It is worth mentioning that this is the second investment by KKR in Reliance Industries (RIL) units. It had previously picked up a 2.32 per cent stake in the digital arm, Jio Platforms for Rs 11,367 crore.

Reliance Retail Limited, a subsidiary of RRVL, operates India’s largest, fastest-growing and 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 almost 12,000 stores in nearly 7,000 towns.

The investment by KKR will give an additional boost to the Ambani’s battle for dominance in the retail market that is also being eyed by Jeff Bezos’ Amazon.com and Walmart Inc’s Flipkart.

In May, Reliance Industries launched an online grocery delivery service JioMart. It has tied up with WhatsApp to connect customers with local kirana stores.

Considering the growth of its retail vertical and targeted customers in mind, RIL acquired the retail and logistics businesses of Future Group for Rs 24,713 crore late last month.

Speaking about the investment Mukesh Ambani, Chairman and Managing Director of RIL, said, “KKR has a proven track record of being a valuable partner to industry-leading franchises and has been committed to India for many years. We look forward to working with KKR’s global platform, industry knowledge and operational expertise across our digital services and retail businesses.”

Founded in 1976, KKR has USD 222 billion in assets under management as of June 30, 2020. It currently has about USD 5.1 billion in private equity investments across more than 15 Indian companies, including Jio Platforms, JB Chemicals, Max Healthcare, Eurokids International and Ramky Enviro Engineers.

Henry Kravis, co-founder and co-CEO of KKR, said, “…through this investment in Reliance Retail Ventures, which is empowering merchants of all sizes and fundamentally changing the retail experience for Indian consumers. 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. We are thrilled to support Reliance Retail in its mission to become India’s leading omnichannel retailer and ultimately to build a more inclusive Indian retail economy.”

KKR is making its investment from its Asia private equity funds.

The transaction is subject to regulatory and other customary approvals, the statement said.

Morgan Stanley acted as financial advisor to Reliance Retail and Cyril Amarchand Mangaldas and Davis Polk & Wardwell acted as legal counsels.

Deloitte Touche Tohmatsu India LLP acted as financial advisor to KKR. Shardul Amarchand Mangaldas & Co. and Simpson Thacher & Bartlett LLP acted as legal counsel to KKR.

After monetising Jio Platforms, which houses the firm’s telecom arm and digital ventures, richest Indian Mukesh Ambani is roping in investors in the retail business.

All the 13 investors, who had poured in a combined Rs 1.52 lakh crore in Jio Platforms, have been offered a chance to explore investing in the retail unit.

Besides Silver Lake and KKR, the other investors in Jio Platforms include Facebook, Google, private equity groups Vista and General Atlantic and Abu Dhabi’s sovereign wealth fund Mubadala.

With this, Jio Platforms and Reliance Retail account for over Rs 9 lakh crore of RIL valuation.

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