Right After QIA's Rs 8,278 Crore Funding Plan, RIL Mulls To Sell 8-10% More Stake In Reliance Retail

A day after Qatar Investment Authority (QIA) announced plans to invest Rs 8,278 crore in Reliance Retail Ventures, a report on Friday said that billionaire Mukesh Ambani-backed flagship Reliance Industries is planning to sell a further 8-10% in the retail arm. Heavyweight RIL erased early gains and traded on a flat note on BSE.

As per the Economic Times report, RIL may sell an 8% to 10% more stake in Reliance Retail Ventures Ltd (RRVL) in a move to retire debt, fund expansion and prepare the retail subsidiary for its market debut.

It reported that RIL's stake sale will take place in tranches over 12-15 months and will be critical for the proposed IPO by the holding company. It is being said that the dilution of the stake will make it easier for Reliance Retail's IPO size to be manageable and ensure its success.

At present, global investors hold an 11% stake in Reliance Retail which also includes QIA, while RIL holds below 89%. A few small investors also hold some shares in the retail giant.

At the time of writing, RIL shares traded at Rs 2475.05 apiece on BSE, marginally down from the previous day's print of Rs 2478.65. The stock ranged from an intraday high and low of Rs 2505 apiece and Rs 2443.95 apiece respectively.

RIL continues to be the largest company in India in terms of market share. Currently, the behemoth's market value is nearly Rs 16.74 lakh crore.

On August 23, Reliance Retail announced that QIA through a wholly-owned subsidiary, will invest ₹ 8,278 crore into the company. This investment values RRVL at a pre-money equity value of ₹ 8.278 lakh crore.

QIA's investment will translate into a minority equity stake of 0.99% in RRVL on a fully diluted basis.

In 2020, Reliance Retail raised Rs 47,265 crore from various global investors including Mubadala and Public Investment Fund, KKR, General Atlantic, TPG, Silver Lake, Abu Dhabi Investment Authority and L Catterton.

On the QIA's investment, Isha Mukesh Ambani, Director, Reliance Retail Ventures said, "We look forward to benefitting from QIA's global experience and strong track record of value creation as we further develop Reliance Retail Ventures Limited into a world-class institution, driving the transformation of the Indian retail sector. The investment by QIA is a strong endorsement of a positive outlook towards the Indian economy and Reliance's retail business model, strategy and execution capabilities."

RIL-backed subsidiary Reliance Retail operates India's largest, fastest-growing, and most profitable retail business serving 267 million loyalty customers with an integrated omnichannel network of over 18,500 stores and digital commerce platforms across grocery,
consumer electronics, fashion & lifestyle, and pharma consumption baskets.

RRVL's vision is to galvanize the Indian retail sector through an inclusive strategy serving millions of customers, empowering micro, small and medium enterprises (MSMEs) and working closely with global and domestic companies as a preferred partner, to deliver immense benefits to Indian society, while protecting and generating employment for millions of Indians. RRVL, through its New Commerce business, has digitized more than 3 million small and unorganised merchants. This will enable these merchants to use technology tools and an efficient supply chain infrastructure to deliver a superior value proposition to their own customers.

In Q1 of FY24, Reliance Retail garnered record revenue of Rs 69,948 crore, up by 19.5% YoY, while EBITDA also came at a record Rs 5,139 crore, rising by 33.9% YoY. The business continues to maintain its strong track record of profit growth. The company also registered the highest-ever footfall of 249 million across formats, while it opened 555 new stores in the quarter.