GIC, TPG to invest about $1 billion in Reliance retail arm

Indian oil-to-telecoms conglomerate Reliance Industries Ltd said on Saturday Singapore sovereign wealth fund GIC and global private equity firm TPG Capital invested a combined 73.50 billion rupees (about $1 billion) in its retail unit.

Reliance, controlled by Asia’s richest man Mukesh Ambani, has secured more than $2 billion in investments from global investors, including KKR & Co, Abu Dhabi state fund Mubadala and Silver Lake Partners, in Reliance Retail Ventures Ltd over the past few months.

GIC will invest 55.12 billion rupees for a 1.22% stake, while TPG Capital Management will invest 18.38 billion rupees to own a 0.41% equity stake in the retail arm, the company said.

The investments in Reliance Retail values the company at a pre-money equity value of 4.285 trillion rupees ($58.47 billion), Reliance said.

This is TPG Capital’s second investment in Reliance. In June, the firm invested $598 million in Reliance’s digital unit Jio Platforms.

Mumbai-headquartered Reliance has approached investors in Jio Platforms about buying stakes in its retail arm, Reuters had reported in September.

Reliance, already India’s biggest retailer with roughly 12,000 stores, forged a $3.38 billion deal in August to acquire rival Future Group’s retail business.

The conglomerate is also expanding its so-called new commerce venture, which ties neighborhood stores to Reliance for online deliveries of groceries, apparel and electronics in a space currently dominated by Walmart Inc’s Flipkart and Amazon.com Inc’s Indian arm.

The $12.1 billion invested by global private equity and sovereign wealth funds in Reliance Industries’ Jio Platforms ($ 9.9 billion) and Reliance Retail ($ 2.3 billion) accounted for 45 per cent of the total PE-VC investment value in 2020, according to data from Venture Intelligence, a research service focused on private company financials, transactions and their valuations. This figure excludes the $10.2 billion in strategic investments by Silicon Valley tech giants Google and Facebook.

The Reliance deals have managed to arrest the overall decline in PE-VC investment figures in 2020 to a marginal two per cent, compared to $27.4 billion (across 750 deals) in the first nine months of 2019.

With the mega investments in Reliance Jio coming to a pause, PE-VC investments in July-September 2020 (Q3’20) - $7 billion across 168 deals - fell 48 per cent compared to the immediate previous quarter (which saw $13.6 billion across a similar number of deals) and 33 per cent compared to the same period last year ($10.5 billion across 232 deals).

Private Equity - Venture Capital (PE-VC) firms invested $26.3 billion (across 547 deals) in the first nine months of 2020.

Apart from the investments in Reliance Group, top investments in Q3’20 include the stressed assets investment by Varde Partners and Goldman Sachs in coal-based power plant operator RattanIndia Power ($567 million), the coming through of the $507 million investment in Oyo Rooms from SoftBank (as a part of its ongoing $1.5 billion round), and the $500 million investment by EQT and Temasek in renewable energy platform O2 Power.

Venture Capital investments fell 18 per cent in value (and 26 per cent by volume) in the 9 months ended September 2020 ($6.5 billion across 438 deals) compared to the same period last year ($7.9 billion in 594 deals).

The latest quarter however showed green shoots in the VC segment with both foreign (especially US headquartered funds) and India-dedicated funds venturing out to invest $2 billion across 137 deals - up from the $1.4 billion across 134 deals in the immediate previous quarter.

Venture Capital is defined as investments in startups less than ten years old. Led by Jio, telecom accounted for $10.2 billion of the investment pie during the first nine months of 2020. Bharti Airtel’s data center focused subsidiary Nxtra Data and smartphone manufacturer Lava International chipped in with $235 million and $90 million, respectively.

IT & ITeS companies came in next, attracting $5.2 billion - a 43 per cent fall from the $9.1 billion raised during the same period last year. The industry however witnessed a slew of big ticket investments in the latest quarter - including Zomato’s $250 million investment from Kora Management, Tiger Global and Temasek and fantasy sports platform Dream11’s $225 million raise from TPG Capital, Tiger Global, ChrysCapital and other investors.

The SoftBank led $150 million investment in Edtech platform Unacademy created India’s 31st Unicorn and the fourth Unicorn startup minted this year (following Pine Labs, Nykaa and Postman).

Agencies