Abu Dhabi Investment Authority takes $750m stake in Reliance Retail Ventures

The 1.2% stake sale brings the total amount secured from backers to more than $5.1bn in about four weeks

Signage for Reliance Digital, a subsidiary of Reliance Industries Ltd., is displayed outside a Reliance Digital store in New Delhi, India, on Monday, Sept. 5, 2016. Reliance Industries today launched their Jio mobile phone service in India, which will offer free voice calling to customers in the world’s second-largest smartphone market, as part of their plan to diversify from the oil and petrochemicals that comprised 95 percent of profit last year. Photographer: Anindito Mukherjee/Bloomberg

Abu Dhabi Investment Authority is to invest 55.12 billion Indian rupees ($750.9m) in Indian billionaire Mukesh Ambani’s Reliance Retail Ventures, the country's largest retail chain.

Adia has taken a 1.2 per cent stake in the venture, which is valued at 4.285 trillion rupees, according to a statement issued to the Bombay Stock Exchange on Tuesday. Its investment brings the total amount raised by Reliance Retail through recent stake sales to about $5.1bn.

"The investment by Adia is a further endorsement of Reliance Retail’s performance and potential and the inclusive and transformational new commerce business model that it is rolling out,” Mr Ambani, chairman and managing director of Reliance Industries, said.

Reliance Retail Ventures runs supermarkets, India’s largest consumer electronics chain, a cash and carry wholesaler, fast fashion outlets and JioMart, an online grocery store. The unit operates almost 12,000 stores in nearly 7,000 towns and reported consolidated revenue of $21.7bn and net profit of $726.4m in the year ended March 31, 2020.

India's retail sector is forecast to grow in size to $1.7tn by 2026, up from $950bn in 2018, according to Statista.

Reliance is looking to grow its market share by consolidating the country's fragmented retail sector, offering to digitise operations of small and unorganised merchants and to partner with global and domestic chains. It recently bought the retail and wholesale businesses of competitor Future Group in a 247.1bn rupee deal that also included logistics and warehousing units.

Future Group owns about 2,000 retail stores across 400 cities and towns in India. Its portfolio includes flagship supermarket chain Big Bazaar and a growing chain of small neighbourhood stores including EasyDay and Heritage Fresh, WH Smith and 7-Eleven. It also owns apparel chains Brand Factory and FBB.

“Reliance Retail has rapidly established itself as one of the leading retail businesses in India and, by leveraging both its physical and digital supply chains, is strongly positioned for further growth," Hamad Shahwan Aldhaheri, executive director of Adia's private equities division, said.

"This investment is consistent with our strategy of investing in market leading businesses in Asia linked to the region’s consumption-driven growth and rapid technological advancement."

Reliance's retail unit has seen an influx of investments over the past four weeks with investors including Abu Dhabi's Mubadala Investment Company, Singaporean wealth fund GIC and private equity firms KKR, General Atlantic, Silver Lake and TPG picking up stakes.

Many of the same companies have also invested in Reliance Industries' technology venture, Jio Platforms, alongside technology giants Facebook and Google. Reliance Industries has raised more than $20bn through stake sales in Jio Platforms this year.

Reliance Retail Ventures was advised by Morgan Stanley and law firms Cyril Amarchand Mangaldas and Davis Polk & Wardwell on the stake sale to Adia.

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