Reliance Retail Ventures Ltd (RRVL) is currently in talks about a comprehensive strategy that encompasses an additional divestment of $250-300 million within the current year. This is in addition to the recent stake dilution in favor of the Qatar Investment Authority (QIA) and the US-based private equity fund KKR.
Sources familiar with the discussions indicate that following this divestment, RRVL plans to make a third stake sale offer to investors next year, at a higher valuation. This will precede its anticipated initial public offering (IPO) in 2025.
In August of this year, RRVL successfully divested 0.99 percent of its stake in favor of the Qatar Investment Authority at a value of $0.99 billion (equivalent to INR 8,278 crore). This transaction has nearly doubled the company’s valuation, increasing it from INR 4.21 trillion to INR 8.27 trillion.
Additionally, RRVL has entered into an agreement with KKR, an existing investor, who has invested an additional INR 2,069.50 crore. This has increased KKR’s stake in the company from 1.17 percent to 1.42 percent.
A top source aware of the development said, “Reliance Retail has offered all their key investors participation in this round too. What is under discussion is to divest more again in 2024 at a higher valuation before preparing for an IPO.”
Sources have indicated that due to upcoming elections in both India and the US next year, the prevailing sentiment is to abstain from pursuing an IPO in 2024 and instead aim for a public offering in the subsequent year.
A spokesperson from Reliance Industries declined to provide comments regarding the ongoing discussion of the plan.
RRVL also boasts investments from various other international stakeholders, including sovereign funds such as Saudi Arabia’s Public Investment Fund, the Abu Dhabi Investment Authority, Mubadala, and GIC Singapore. Additionally, TPG, Silverlake, and General Atlantic are among the global investors who contributed funds in 2020 and have seen their valuations almost double by 2023.
The divestment of funds in Reliance Retail constitutes 11.31 percent of the total stake, with investors contributing INR 57,562 crore for this acquisition.
In FY23, Reliance Retail recorded annual revenues exceeding INR 2.6 trillion, reflecting a substantial increase of 30 percent, while also achieving profits totaling INR 9,181 crore.
With its current valuation, Reliance Retail ranks among the top 10 retailers globally and stands as one of the four largest retailers in the country. In FY23, it recorded a remarkable 780 million footfalls, and its registered customer base expanded to nearly 250 million. This extensive reach allows Reliance Retail to serve and provide value to approximately 30 percent of the addressable population in the country, solidifying its position among the world’s top 10 most frequented retailers.
In FY23, the digital and new commerce divisions of the company achieved revenues of INR 50,000 crore, constituting one-fifth of its total sales. Reliance Retail has made substantial investments exceeding $10 billion over the past two years to bolster this segment, and this commitment is evident through its extensive expansion efforts. In the first quarter of FY24 alone, the company opened 55 new stores, bringing its total store count to 18,446, encompassing a vast retail space of 70.6 million square feet.
The company operates across diverse retail sectors, including consumer electronics, fashion and lifestyle, groceries, consumer brands, as well as the Jio Mart and Milkbasket ecommerce platforms.