General Atlantic and others to buy stakes in Reliance Retail

India’s Reliance Industries said that private equity firm General Atlantic would invest Rs36.75 billion ($498.31 million) for a 0.84% stake in its retail arm, while Silver Lake co-investors will also buy a stake.

The deals underscore growing investor interest in Reliance Retail, which is led by Asia’s richest man Mukesh Ambani. Reliance is seeking investors for its retail arm after raising more than $20 billion in recent months for its digital unit.

General Atlantic CEO Bill Ford said he was “thrilled to be backing” Ambani’s mission to drive substantial change in the country’s retail sector. Reliance Retail is seen as a formidable rival to Amazon.com and Walmart’s Flipkart in India.

In a separate statement, Reliance said Silver Lake co-investors would invest an additional Rs18.75 billion ($254.89 million) in its retail unit.

Earlier in September, Silver Lake had announced a Rs75 billion ($1.02 billion) investment in Reliance Retail, and the total investment by the US private equity firm and its co-investors now stood at Rs93.75 billion ($1.27 billion).

Wednesday’s investments give Reliance Retail a pre-money valuation of Rs4.29 trillion ($58.17 billion). Reliance, which in May launched an online grocery service, also operates around 12,000 brick and mortar stores.

With the latest investments, Reliance has now sold about a 4.3% stake and raised Rs186 billion ($2.53 billion) in its retail unit.

Other investors like SoftBank have also expressed interest in the Reliance unit.

In India, competition for market share has prompted e-commerce players to look for new partnerships. Financial daily Mint reported on Tuesday U.S. retailer Walmart was in talks to invest up to $25 billion in Tata Group’s planned “super-app,” which will tie in all of the conglomerate’s consumer businesses.

Meanwhile, Abu Dhabi state fund Mubadala Investment Co is in advanced talks to invest up to $1 billion in the retail division of India’s Reliance Industries, two sources told Reuters, as investor interest in the Indian company surges.

Reliance Retail is on a fund raising spree and has secured around $1.8 billion in the past few weeks from KKR & Co and Silver Lake Partners.

Reliance, controlled by Asia’s richest man Mukesh Ambani, has approached investors, who collectively pumped more than $20 billion into its Jio Platforms digital business this year, to take stakes in its retail business, which has nearly 12,000 stores and sells everything from groceries and electronics to fashion and shoes.

Mubadala invested around $1.2 billion in Jio Platforms and its executives have held extensive talks in recent weeks with Reliance for investing in its retail venture, several sources familiar with the talks said.

While one source said Mubadala “is ready with” $1 billion for Reliance Retail and doing due diligence, a second source said the talks were at an advanced stage and said the investment could be anywhere between $500 million and $1 billion.

A Reliance spokesman said the company cannot confirm or deny any transaction, adding: the “company evaluates various opportunities on an ongoing basis”.

Mubadala declined to comment. It is the second-biggest state investor in Abu Dhabi after Abu Dhabi Investment Authority, managing about $240 billion in assets.

For Mubadala, any further investment into Reliance will come months after it said it was under-invested in Asia and planned to expand its portfolio in the region.

Reliance is likely to soon announce a few investments into its retail unit, and those will be from investors who recently invested in its digital arm, one of the sources aware of the matter said.

While talks are ongoing with several investors, Reliance believes Facebook and Google, both of which invested in Reliance’s digital business, are unlikely to put funds in its retail division due to lack of synergies, another source said.

“Reliance wants the same set of investors; but some new investors could come in,” the source said.

Japan’s SoftBank Group had also expressed interest in investing in Reliance Retail, but the talks have not moved forward as the company was prioritising other investors with which it has struck recent deals, the source said.

SoftBank did not respond to a request for comment.

Ambani’s push to seek investments in its retail business come as the oil-to-telecoms Indian conglomerate has been looking to expand its e-commerce operations to compete against Walmart’s Flipkart and Amazon.com’s Indian business.

A separate source said Amazon and Reliance have also been in talks, but there was no certainty of a deal on an investment in Reliance Retail.

Reuters