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Tuesday, September 29, 2020

Silver Lake to invest Rs 7,500 crore in Reliance Retail for 1.75% stake

Silver Lake's investment will translate into a 1.75 per cent equity stake in Reliance Retail on a fully diluted basis, Reliance Industries (RIL) informed in an exchange filing to the BSE.

By: Express Web Desk | New Delhi | Updated: September 9, 2020 10:56:54 am
Customers stand outside a Reliance Fresh Ltd. store in Mumbai, India, on Sunday, Jan. 28, 2018. (Photographer: Dhiraj Singh/Bloomberg)

Oil-to-telecom heavyweight Reliance Industries (RIL) on Wednesday announced that US-based private equity firm Silver Lake will invest Rs 7,500 crore into its retail subsidiary Reliance Retail (RRVL). The investment values RRVL at a pre-money equity value of Rs 4.21 lakh crore.

Silver Lake’s investment will translate into a 1.75 per cent equity stake in RRVL on a fully diluted basis, the company informed in an exchange filing to the BSE. The transaction is subject to regulatory and other customary approvals, it said.

Morgan Stanley was as financial advisor to Reliance Retail and Cyril Amarchand Mangaldas and Davis Polk & Wardwell acted as legal counsels. Latham & Watkins and Shardul Amarchand Mangaldas & Co acted as legal counsels for Silver Lake, the filing said.

This is the second major investment Silver Lake in a RIL subsidiary. It had earlier invested $1.35 billion in Jio Platforms earlier this year. It was the first US private equity firm to invest in Jio after social media behemoth Facebook took a 9.99 per cent stake in the company for Rs 43,573.62 crore. Silver Lake bought 2.08 per cent in Jio in two tranches for a total of Rs 10,202.55 crore.

At RIL’s annual general meeting (AGM) in July, its chairman and managing director Mukesh Ambani had stated that it had been approached by strategic and financial investors for a stake in Reliance Retail.

Commenting on the transaction with Silver Lake, Ambani said, “I am delighted to extend our relationship with Silver Lake to our transformational efforts of building an inclusive partnership with millions of small merchants while providing value to Indian consumers across the country in the Indian retail sector.”

“We believe technology will be key to bringing the much-needed transformation in this sector so that various constituents of the retail ecosystem can collaborate to build inclusive growth platforms. Silver Lake will be an invaluable partner in implementing our vision for Indian Retail,” he said in the statement.

Commenting on the investment, Egon Durban, Co-CEO and Managing Partner of Silver Lake, said, “we are pleased to deepen our relationship with Reliance with this investment. Mukesh Ambani and his team at Reliance have created an outstanding world leader in retail and technology through their courageous vision, commitment to societal benefits, innovation excellence and relentless execution.”

“The success of JioMart in such a short time span, especially while India, along with the rest of the world, battles the COVID-19 pandemic, is truly unprecedented, and the most exciting growth phase has just begun. Reliance’s new commerce strategy could become the disruptor of this decade. We are thrilled to have been invited to partner with Reliance in their mission for Indian Retail,” Durban said.

RIL, which is looking to expand its retail business through both online and offline channels, is talking to a range of global investors who are looking to invest in India’s largest retail firm and take on its e-commerce rivals – Amazon India and Walmart-owned Flipkart in the Indian market.

The company has also been on a shopping spree to expand and consolidate its presence both in online and offline markets in the country. Last month, RRVL had agreed to acquire the retail business of Kishore Biyani’s Future Group in a consideration of Rs 24,713 crore. The company had also acquired a majority equity stake in online pharmacy Vitalic Health Pvt Ltd and its subsidiaries — known as Netmeds — for a cash consideration of around Rs 620 crore.

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