KKR to invest Rs 5,550 crore in Reliance Retail for 1.28% stake

The investment values Reliance Retail at a pre-money equity value of Rs 4.21 lakh crore. This marks the second investment by KKR in a subsidiary of Reliance Industries, following a Rs 11,367 crore investment in Jio Platforms announced earlier this...

2nd cheque in 2 weeks for Reliance Retail, KKR picks up 1.28% stake for Rs 5,550 cr
NEW DELHI: Reliance Industries on Wednesday said the private equity player KKR will invest Rs 5,550 crore into its retail arm Reliance Retail Ventures (RRVL).

KKR's investment translates into a 1.28 per cent equity stake in RRVL on a fully diluted basis, the company said.

The investment values Reliance Retail at a pre-money equity value of Rs 4.21 lakh crore. The valuation for Retail Retail this deal gave was same as Silver Lake's Rs 7,500 crore deal for 1.75 per cent stake earlier this month. With the two deals within two weeks, RIL's retail venture has raised a total of Rs 13,050 crore.


This marks the second investment by KKR in a subsidiary of Reliance Industries, following a Rs 11,367 crore investment in Jio Platforms announced earlier this year. KKR is making this investment from its Asia private equity funds. The transaction is subject to regulatory and other customary approvals.

“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,” said RIL Chairman and Managing Director Mukesh Ambani.

Ambani's back-to-back Jio deals earlier this year had taken the market by surprise. After Google's Rs 33,737 crore investment in July, Jio Platforms raised a combined of Rs 1,52,056 crore by selling 32.97 per cent stake in mobile business. That put Reliance Jio's value at Rs 4,61,195 crore.
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In case of retail, the penetration in the organised market in India is expected to increase 17 per cent by FY25 from 11 per cent in FY19. An analysts had earlier told ETMarkets.com that retail, especially brick-and-mortar stores, are not as profitable business as Reliance Jio, and believed that the market was assigning a lower value to the retail business earlier. "But, if future retail deals continue to value retail business at Rs 4 lakh crore plus, a re-rating on the counter is likely, he had said after Silver Lake's deal.

Reliance Retail, through its new commerce strategy, has started a transformational digitalization of small and unorganised merchants and is committed to expanding the network to over 20 million of these merchants, Reliance said in a statement.

Henry Kravis, Co-Founder and Co-CEO of KKR, said, “We are pleased to deepen our relationship with Reliance Industries through this investment in Reliance Retail Ventures, which is empowering merchants of all sizes and fundamentally changing the retail experience for Indian consumers. 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 established its first of eight Asia offices in 2005 and currently has approximately $5.1 billion in private equity investments across 15 Indian companies, including Jio Platforms, JB Chemicals, Max Healthcare, Eurokids International and Ramky Enviro Engineers.
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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.


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It serves close to 640 million footfalls across its 12,000 stores nationwide, according to RIL.
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