KKR to invest $250 million in Reliance Retail, increasing Reliance’s valuation to $100 billion. It translates into an additional equity stake of 0.25% in Reliance Retail on a fully diluted basis.
KKR & Co. Inc. (KKR.N) has significantly strengthened its investment in Reliance Retail Ventures Limited (RRVL), the flagship retail arm of Mukesh Ambani's sprawling business empire. The global investment giant injected an additional $250 million in Indian billionaire Mukesh Ambani's Reliance Retail Ventures, which has valued the Indian retail giant at $100 billion, solidifying its status as one of Asia's top companies by equity value.
The New York-based private equity firm's latest investment translates into an additional equity stake of 0.25% in Reliance Retail on a fully diluted basis. This increases KKR's total equity ownership in Reliance Retail Ventures to 1.42%, affirming their faith in the company's capabilities.
Ms Isha Mukesh Ambani, Director, of RRVL, said, “We are pleased to receive continued support from KKR as an investor in Reliance Retail Ventures Limited. We highly value our deepening partnership with KKR, and their latest investment in RRVL after their previous investment further reinforces their strong belief in RRVL’s vision and capabilities. We look forward to continued engagement with KKR and to benefit from their global platform, industry knowledge, and operational expertise, in our journey towards driving transformation of the Indian retail sector.”
Reliance Retail's Expansive Operations
Reliance Industries subsidiary Reliance Retail Ventures has been attracting considerable attention and investment lately because of its expansive operations. From grocery to electronics, Reliance Retail's diverse portfolio includes partnerships with global brands like Jimmy Choo, Marks & Spencer, and Pret A Manger. With over 18,000 stores, the Mumbai-based conglomerate competes fiercely with international giants like Amazon (AMZN.O) and Walmart's (WMT.N) Flipkart.
KKR's Ongoing Partnership and Future Prospects
KKR's latest financial infusion into Reliance Retail is primarily sourced from its Asian Fund IV, which is subjected to regulatory approvals, as confirmed by Reliance. Morgan Stanley acted as financial adviser to Reliance Retail.
Mr Joe Bae, Co-CEO, of KKR, said, “We are pleased to extend our relationship with Reliance Retail Ventures Limited. Throughout our investment period in Reliance Retail, we have been impressed by the company’s vision and extensive work to empower retailers across India through digitalization, as well as by its resilience and performance in spite of the pandemic and other disruptions. We look forward to continuing to work alongside the Reliance Retail team to support the company’s mission to build a more inclusive Indian retail economy.”
Mr Gaurav Trehan, Head of Asia Pacific Private Equity and Head of India, KKR, added, “Reliance Retail is a true corporate leader and innovator in India, and its differentiated model has the potential to digitalize and transform the country’s retail industry. We are pleased to have the opportunity to continue collaborating with this team and pursue the growth opportunities ahead.”
KKR's latest investment strengthens its belief in Reliance Retail's vision and potential. As the Indian retail sector continues to evolve, KKR's deepening partnership with Reliance Retail is expected to yield mutual benefits.
Reliance Retail's Remarkable Growth
The trajectory of Reliance Retail's growth has been nothing short of remarkable. In 2020, it secured $5.71 billion in funding by selling a 10.09% stake to various investors, including KKR, the Saudi Public Investment Fund, General Atlantic, and the United Arab Emirates' Mubadala. KKR's initial investment in 2020 amounted to $669.65 million. Ambani recently shared that the 2020 fundraising increased the valuation of the business to approximately $52 billion. Astonishingly, in less than three years, the value of Reliance Retail has nearly doubled.
Reuters reported earlier this month that the company is in advanced talks with global investors to raise an additional $2.5 billion by the end of September, ahead of a potential stock market listing. This aligns with Ambani's 2019 statement to take its retail business public within five years.
Reliance Retail’s Expansive Operations and Global Partnerships
Reliance Retail's financial performance has been commendable. For the fiscal year ending in March 2023, Reliance Retail reported a consolidated net profit of $1.11 billion on revenues totaling $31.7 billion. This robust performance has coincided with Reliance's aggressive acquisition of numerous small grocery and non-food brands as part of its strategy to establish a consumer business with annual sales of $6 billion within five years, thereby challenging international giants like Unilever (ULVR.L).
Last month, JP Morgan analysts stated that the medium-term investment case for Reliance India Limited (RIL)is driven by strong cash flows and the ability to invest in growth businesses and potential value-unlocking in the medium term.
What is Reliance Industries Limited?
Reliance Industries Limited (RIL) is India’s largest private sector company, with a consolidated revenue of $118.6 billion, cash profit of $15.3 billion, and net profit of $9 billion for the year ended March 31, 2023. Reliance’s activities span hydrocarbon exploration and production, petroleum refining and marketing, petrochemicals, advanced materials and composites, renewables (solar and hydrogen), retail and digital services. Currently ranking 88th, Reliance is the largest private sector company from India to feature in Fortune’s Global 500 list of “World’s Largest Companies” for 2023. The company stands 45th in the Forbes Global 2000 rankings of “World’s Largest Public Companies” for 2023 - the top-most among Indian companies.
What is Reliance Retail Ventures Limited?
RRVL, through its subsidiaries and affiliates, operates an integrated omni-channel network of over 18,500 stores and digital commerce platforms across Grocery, Consumer Electronics, Fashion and lifestyle, and Pharma consumption baskets and has partnered with over 3 million merchants through its New Commerce initiative. Reliance Retail Limited, a subsidiary of RRVL, is the only Indian retailer in the global Top 100 and amongst the fastest-growing retailers globally as per Deloitte's Global Powers of Retailing 2023. RRVL reported a consolidated turnover of $ 31.7 billion and a net profit of $ 1.1 billion for the year ended March 31, 2023.
What is KKR & Co. Inc.?
KKR & Co. Inc. is a leading global investment firm that offers alternative asset management capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit, and real assets and has strategic partners that manage hedge funds.