Reliance Industries Ltd (RIL), the country's largest private sector conglomerate, has infused fresh capital of Rs 11,650 crore as a promoter in its retail arm, Reliance Retail Ventures, for expanding its business in grocery, consumer electronics, fashion and lifestyle.
Reliance Retail Venture, a holding company for Group's retail business, has big expansion plans. The recent acquisition of Kishore Biyani's retail, wholesale and logistic business clearly shows the organic as well as inorganic ambitions of Ambanis in the modern retail business. Two big trends that are driving high growth in modern retail are digitisation and the gradual shifting of unorganised retail into organised retail.
The fresh fund infusion of Rs 11,650 crore is part of the company's plan to increase the capital base. The company had recently increased its authorised capital base from Rs 10,000 crore to Rs 25,000 crore.
There is already a rush of investors to be part of the Reliance's retail journey. In a month's time, Reliance Retail Venture has attracted billion dollar investors from global marquee names. The company has raised Rs 37,710 crore from sovereign funds and private equity investors like Abu Dhabi Investment Authority, Silver Lake, General Atlantic, Mubadala, GIC, TPG and ADIA.
The current investment of Rs 37,710 crore translates into an equity stake of over 8 per cent. Sources suggest there are more investors lined up to invest in the retail venture.
The current investments in Reliance Retail have already valued the retail arm at around Rs 4.2 lakh crore. In fact, Jio Platforms, the digital business, had recently attracted huge investors interest from global funds and strategic investors, which had pegged its enterprise value at over Rs 5.15 lakh crore.
These higher valuations in the retail and digital arm are getting reflected in the parent RIL's market capitalisation. In little over a year, RIL's market cap has doubled to Rs 15 lakh crore.
The company's retail business with 12,000 stores is already up and running. The company reported consolidated revenues of Rs 1.62 lakh crore and net profits of Rs 5,448 crore in FY20.