KKR invests $250m in Ambani's Reliance Retail to give it a $100bn valuation

Move raises US private equity group's stake in India’s largest retailer to 1.42%

A Reliance Market supermarket in Ahmedabad, Gujarat. Reliance Retail Ventures has a network of more than 18,500 stores. Reuters

Global private equity firm KKR has raised its stake in India's Reliance Retail Ventures Limited by investing 20.69 billion rupees ($250 million) to give RRVL a valuation of $100 billion, making it one of the top four companies by equity value in Asia’s third-largest economy.

KKR’s follow-on investment translates into an additional equity stake of 0.25 per cent in RRVL on a fully-diluted basis, taking its total equity stake in the Indian company to 1.42 per cent, the retailer said on Monday.

RRVL, India's largest and most profitable retail business, is a subsidiary of Reliance Industries, a Mumbai-based conglomerate controlled by billionaire chairman Mukesh Ambani, Asia's richest man.

RRVL's previous funding round of 472.65 billion rupees – led by various global investors, including KKR, the Saudi Public Investment Fund, General Atlantic and Abu Dhabi’s sovereign wealth fund Mubadala – was completed at a pre-money equity value of 4.2 trillion rupees in 2020.

That year, KKR had invested 55.5 billion rupees ($669.65 million) in Reliance Retail, Reuters reported.

“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,” said RRVL director Isha Ambani.

“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.”

RRVL, through its subsidiaries and associates, serves 267 million customers. It has a network of more than 18,500 stores and digital commerce platforms across grocery, consumer electronics, fashion and lifestyle, and pharma consumption baskets.

The company competes with Amazon and Walmart’s Flipkart in India.

Qatar Investment Authority, the Gulf state’s sovereign wealth fund, said last month that it would invest 82.78 billion rupees in RRVL through a wholly owned subsidiary.

QIA’s investment will translate into a minority equity stake of 0.99 per cent in RRVL.

“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 digitalisation, as well as by its resilience and performance in spite of the pandemic and other disruptions,” KKR's co-chief executive Joe Bae said.

KKR’s investment comes primarily from its Asian Fund IV. The transaction is subject to regulatory approvals, Reliance said.

New York-based financial services company Morgan Stanley acted as financial adviser to RRVL.

Reliance’s retail arm posted a net profit of 24.48 billion rupees in the last quarter, up by about 18.8 per cent, while revenue from operations surged to 621.6 billion rupees, from 515.8 billion rupees a year ago.

Reliance is looking to grow its market share by consolidating the country's fragmented retail sector, offering to digitalise operations of small and unorganised merchants and to partner with global and domestic chains.

Reliance Industries’ total net profit attributable to the owners of the company in the three months ending in June dropped to 160.1 billion rupees, from 179.5 billion rupees in the same period a year earlier.

Mr Ambani, 66, India richest man, announced the decision to appoint his sons Akash and Anant and daughter Isha to the board of the $200 billion conglomerate at Reliance’s annual general meeting last month.

His wife Nita is stepping down from the board. Mr Ambani will remain chairman and managing director of the company for five more years.

The Indian tycoon announced that he expects Reliance’s value to double by 2027, as it continues to focus on an aggressive 5G strategy while expanding its green energy portfolio and making forays in the insurance sector.