Silver Lake eyes $1bn stake in Rel Retail

  • 9 months ago
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Mumbai: After acquiring a piece of Jio Platforms, American private equity investor Silver Lake Partners is in discussions with Reliance Industries (RIL) to buy a stake in its retail arm. Silver Lake is looking to invest $1 billion (about Rs 7,350 crore) in Reliance Retail, according to the Financial Times.
The investment could give Silver Lake a 1.75% stake in Reliance Retail, which just inked a deal to acquire rival Future Retail. The US fund had pumped in Rs 10,203 crore for a stake of just over 2% in Jio Platforms, the digital services arm of RIL. While RIL declined to comment on Silver Lake’s potential deal in Reliance Retail, it said that the company evaluates various opportunities on an ongoing basis.
The Financial Times also said that investors in Jio Platforms have been given an opportunity to invest in Reliance Retail. Besides Silver Lake, 12 US and Middle Eastern firms — including L Catterton, TPG and Saudi Arabia Public Investment Fund — have invested in Jio Platforms. The 13 firms, which together hold nearly 33% in Jio Platforms, have invested Rs 1.5 lakh crore ($21 billion) in the digital services unit, which plans to go for a US listing.
RIL chairman Mukesh Ambani, during the company’s annual shareholder meeting last July, had said that it has received “strong interest” from strategic and financial investors in Reliance Retail. And that it will induct them in the retail business in the next few quarters.
The proposed investment by Silver Lake has pegged Reliance Retail’s valuation at $57 billion which, according to brokerage firm CLSA, is 18% lower than what it had assigned to the retail outfit. CLSA said as this possible stake sale would also include the retail business of Future Group, the valuation suggested in the (FT) report is lower than its expectations.
JP Morgan said a stake sale in Reliance Retail would add further balance sheet flexibility. “We believe the key will be whether Reliance Retail is able to attract strategic investors (global retailers and e-commerce companies that are currently competing with Reliance Retail in India), which could drive re-rating on expectations of reduced competition for the company,” said JP Morgan in a report.

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