Abu Dhabi Investment Authority to invest Rs 5,512.5 crore in RIL retail arm; joins Silver Lake, KKR among others

Sovereign wealth fund Abu Dhabi Investment Authority (ADIA) will inject Rs 5,512.5 crore into the retail division of the Mukesh Ambani-controlled Reliance Industries becoming the latest investment firm to join a rush of global investors.

The investment by ADIA in Reliance Retail Ventures Limited (RRVL) in exchange for a 1.2 percent stake values the company, India’s largest retailer, at a pre-money equity value of Rs 4.285 lakh crore. RRVL has now raised a combined Rs 37,710 crore from leading global investors such as Silver Lake, KKR, General Atlantic, Mubadala, GIC, TPG and ADIA in less than four weeks, RIL said in a statement on 6 October.

Mukesh Ambani, chairman and managing director of Reliance Industries, said, “We are delighted with ADIA’s current investment and continued support and hope to benefit from its strong track record of over four decades of value creation globally. 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.”

Reliance Retail, a subsidiary of RRVL, operates India’s largest, fastest-growing and most profitable retail business serving close to 640 million footfalls across its nearly 12,000 stores nationwide. Oil-to-telecom conglomerate Reliance Industries has been diversifying its business and shoring up its retail presence ahead of a big-bang listing. Amid the coronavirus pandemic, it pushed the grocery business heavily and also launched JioMart, rivalling the likes of Amazon and Walmart backed Flipkart. Recently, it also made a foray into online pharmacy and acquired a majority stake in Netmeds for Rs 620 crore.

Established in 1976, ADIA is a globally-diversified investment institution that invests funds on behalf of the Abu Dhabi government through a strategy focused on long-term value creation. ADIA has invested in private equity since 1989 and has built a significant internal team of specialists with experience across asset products, geographies and sectors.

Hamad Shahwan Aldhaheri, executive director of the Private Equities Department at ADIA, said, “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. 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.”

The transaction is subject to regulatory and other customary approvals. Morgan Stanley acted as financial advisor to Reliance Retail and Cyril Amarchand Mangaldas and Davis Polk & Wardwell acted as legal counsels.

Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd