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Monday, October 2, 2023

India’s Reliance Retail Seeks $2.5 Billion

Reliance Retail Ventures, led by Indian billionaire Mukesh Ambani, is in advanced discussions with global investors to secure approximately $2.5 billion by the end of September, in anticipation of a potential stock market listing, according to sources familiar with the matter who spoke to Reuters.

Three sources indicated that the $2.5 billion fundraising target is part of a broader objective of $3.5 billion set by the firm. A portion of this, $1 billion, was already secured from the Qatar Investment Authority (QIA) and announced last month. Reliance responded to the reports with an emailed statement, stating, “As a policy, we do not comment on media speculation and rumours,” but added, “Our company evaluates various opportunities on an ongoing basis.”

Reliance had previously disclosed a $1 billion investment from QIA, valuing India’s largest retailer at $100 billion. Its operations encompass a wide range of products, from groceries to electronics, along with foreign partnerships with brands like Burberry and Pret A Manger.

Morgan Stanley is reportedly advising Reliance on this fundraising process, according to two sources with direct knowledge. However, Morgan Stanley did not provide a comment. While the potential investors were not named by the sources, one mentioned that Reliance was in discussions with at least two US-based investors, while the other two sources indicated growing interest from existing foreign investors in Reliance, including certain sovereign wealth funds.

Should the investment materialize, it will further establish India’s appeal as a notable destination for Western private investors. This is in contrast to the diminishing interest in new investments in China due to the country’s deteriorating economic outlook and geopolitical tensions.

In 2020, Reliance Retail raised $5.71 billion by selling a 10.09% stake to investors such as KKR, the Saudi Public Investment Fund, General Atlantic, and the UAE’s Mubadala.

Mukesh Ambani noted earlier this week that the 2020 fundraising had valued the business at around $52 billion, and he highlighted that “in less than three years, the valuation of retail has almost doubled.”

According to a fourth source with direct knowledge, Reliance is likely to make two fundraising announcements within two weeks, with the valuation of the company hovering around the same level as when QIA invested, approximately $100 billion. This suggests that a potential $2.5 billion investment would correspond to a 2.5% stake in the company.

Ambani mentioned during the company’s annual general meeting this week that “Several marquee global strategic and financial investors have shown strong interest in Reliance Retail. I will update you about our progress with them in due course,” without providing further specifics.

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