Reliance Retail Ventures, having secured approximately $7.5 billion in its earlier two funding rounds, is gearing up for yet another round of fundraising from institutional investors. According to The Hindu BusinessLine, sources indicate that this time, it aims for a formidable valuation surpassing $160 billion.
Last year, when Reliance Retail Ventures raised over INR 15,000 crore from KKR, Qatar Investment Authority, and Abu Dhabi Investment Authority, its valuation stood slightly above $100 billion, marking a twofold increase from the valuation at which it had raised over INR 47,000 crore in 2020.
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Indications suggest that this time, Reliance Retail Ventures plans to raise a smaller amount, estimated between $1-2 billion, as management has clearly stated that the majority of future capital expenditures will be funded through internal accruals.
Preparations for the fundraising are still in the preliminary stages, with sources indicating that it is likely to occur in the second half of the year. The company plans to approach some of the investors who participated in previous rounds, as well as new investors.
Queries directed towards RIL for comment did not elicit any response.
Growth Trajectory and Financial Performance
The confidence in pursuing a higher valuation is grounded in the swift expansion of Reliance Retail. Its revenues surged by over 87 percent between FY20 and FY24, with EBITDA more than doubling during this period. In FY24, net profit increased by approximately one-fifth year-on-year, while revenue grew by over 15 percent.
Prominent brokerage firms have assessed the retail company’s value within the range of $114-120 billion.
With a store footprint exceeding 18,000 and spanning across 65 million square feet, it stands as the largest retailer in the country by a significant margin. Analysts anticipate that the company’s future growth will be fueled by increased sales per square foot from the additional stores.
The company has significantly improved its balance sheet by reducing debt, while witnessing a four-fold increase in operating cash flows. Capital expenditures decreased by one-fifth to INR 36,800 crore, and it is anticipated to remain subdued in the coming years as investment intensity diminishes.
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