U.S. private equity firm Silver Lake Partners will invest 75 billion rupees ($1.02 billion) in Mukesh Ambani’s Reliance Industries’ retail arm, the company said in a statement Wednesday.
Silver Lake’s investment, which gives it a 1.75% stake in Reliance Retail, values the retail business at $56.9 billion (4.21 trillion rupees). This is the second investment for Silver Lake in a Reliance business after it paid $748 million in May for just over a 1% stake in Reliance’s tech and media business, Jio Platforms.
Ambani, who serves as Reliance’s chairman and managing director and has a net worth of $82.5 billion, in a statement said he was “delighted to extend” his group’s relationship with the private equity firm to “our transformational efforts of building an inclusive partnership with millions of small merchants while providing value to Indian consumers across the country.”
(Disclosure: Reliance Industries owns Network18, which publishes Forbes India.)
In May, Reliance launched JioMart, an online grocery service meant to compete with the likes of Amazon and Walmart-owned Flipkart and others in the business.
Egon Durban, co-CEO and managing partner of Silver Lake, referred to that platform in a statement saying, “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 Retail, which was started in 2007, netted $726 million on revenue of $21.7 billion for financial year ending March.
India’s retail market is estimated to be $825 billion in sales (at pre-Covid-19 levels) of which 12% or barely $100 billion comes from the so-called organized sector which includes e-commerce companies as well as the neighborhood stores that throng the country, according to retail consultancy Technopak.
Arvind Singhal, chairman of Technopak, said the deal was “remarkable” especially since no one in India, barring fellow billionaire Radhakrishna Damani’s supermarket chain DMart, had so far found a “winning formula” for the sector.
Silver Lake’s investment in the retail business comes weeks after Reliance sold 33% in Jio to a slew of global investors including Facebook, Google and private equity firms, among others, raising $20.2 billion in less than three months.
Ambani clearly has shifted his focus to his retail business now as this deal comes less than two weeks after Reliance announced in late August that it would buy retail pioneer Kishore Biyani’s Future Group for $3.3 billion. Biyani was among the country’s richest in 2019.