Singapore wealth fund GIC and TPG invest $1bn in Ambani's Reliance Retail Ventures

Singapore’s sovereign wealth fund GIC and global private equity firm TPG Capital will collectively invest 73.49 billion Indian rupees ($1bn) for stakes in Indian billionaire Mukesh Ambani’s Reliance Retail Ventures, the country’s largest retail chain.

GIC will invest 55.12bn Indian rupees for a 1.22 per cent stake and TPG will buy a 0.41 per cent equity stake for 18.37bn rupees in the retail arm of Mumbai-based Reliance Industries, the company said in a statement on Saturday.

The latest investments value Reliance Retail Ventures at 4.285 trillion rupees.

“GIC’s global network and track record of long-term partnerships will be invaluable to the transformation story of Indian retail,” Mr Ambani, chairman and managing director of Reliance Industries, said. “This investment is a strong endorsement of our strategy and India’s potential.”

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.

GIC’s new investment will “enable the company to position Reliance Retail for the strong secular growth in India’s retail market,” Lim Chow Kiat, chief executive of GIC, said. “We believe Reliance Retail will continue to use its extensive supply chain and store networks, as well as strong logistics and data infrastructure, to add value to its customers and shareholders.”

Reliance Retail Ventures was advised on the deals by law firms Cyril Amarchand Mangaldas and Davis Polk & Wardwell. Morgan Stanley was its financial adviser on both deals.

Deloitte Touche Tohmatsu India was TPG’s financial adviser, while Shardul Amarchand Mangaldas provided legal advice. The deals are subject to regulatory and other approvals, Reliance Retail Ventures said.

TPG is making the investment through its TPG Capital Asia fund, marking the company’s second investment in a subsidiary of Reliance Industries following a stake purchase in Jio Platforms earlier this year.

“There is a significant opportunity to transform the Indian retail ecosystem for the better,” Puneet Bhatia, co-managing partner of TPG Capital Asia, said. “Through their New Commerce initiative, Reliance Retail continues to lead the industry by creating a retail platform that meets the demands of a new generation of Indian consumers.”

Mr Ambani recently began selling stakes in the retail unit of his conglomerate Reliance Industries, which attracted global investors including Abu Dhabi’s Mubadala Investment Company and private equity firms General Atlantic, KKR & Co and Silver Lake.

Last week, Mubadala said it will invest Dh3.1bn ($844m) for a 1.4 per cent stake Reliance Retail Ventures. It also invested $1.2bn in technology venture Jio Platforms earlier this year. Mubadala, which has a $232bn portfolio spanning five continents, has interests in a range of sectors from aerospace to real estate.

US-based private equity firm General Atlantic announced an investment of $498m for a 0.84 per cent stake in Reliance’s retail arm, while two other private equity firms, KKR and Silver Lake, have invested $754m and $1bn, respectively. All three firms also invested in Jio Platforms, alongside technology giants Facebook and Google. In total, Reliance Industries raised about $20bn through stake sales in Jio Platforms.

Last month, Reliance Retail Ventures agreed to buy the retail and wholesale business and the logistics and warehousing unit of its rival Future Group in a 247.1bn rupee deal, growing its share of the country’s retail sector.

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

Updated: October 4, 2020 11:54 AM