Silver Lake to invest Rs 7,500 cr in Reliance Retail for 1.75% stake; private equity firm holds 2.08% in Jio Platforms

In a filing to the stock exchanges, Reliance Industries said that US-based private equity fund Silver Lake Partners will invest Rs 7,500 crore for a 1.75 equity stake in Reliance Retail, the retail chain arm of the telecom to petrochemical to retail conglomerate. This investment values Reliance Retail at a pre-money equity value of Rs 4.21 lakh crore, and is being viewed by industry watchers as a vote-of-confidence in Reliance Retail’s ability to lead a disruptive, technology-led transformation of India’s retail sector in a post-pandemic world. This is the second large investment by Silver Lake in a Reliance Industries subsidiary after  investing $1.35 billion or Rs. 10,200 crore in Jio Platforms for a 2.08 percent stake in two tranches earlier this year. Silver Lake Partners is a specialist firm focused on technology companies and has invested in global tech majors like Twitter, Airbnb, Alibaba, Dell Technologies, ANT Financials,  Alphabet’s Waymo, and Verily among others. With this deal, Jio Platforms and Reliance Retail now account for over Rs 9 lakh crore of RIL’s valuation. Commenting on the transaction with Silver Lake, Mukesh Ambani, Chairman and Managing Director, Reliance Industries, said, “I am delighted to extend our relationship with Silver Lake to our transformational efforts of building an inclusive partnership with millions of small merchants while providing value to Indian consumers across the country in the Indian retail sector. We believe technology will be key to bringing the much-needed transformation in this sector so that various constituents of the retail ecosystem can collaborate to build inclusive growth platforms. Silver Lake will be an invaluable partner in implementing our vision for Indian Retail.” Commenting on the investment, Egon Durban, Co-CEO and Managing Partner of Silver Lake, said, “We are pleased to deepen our relationship with Reliance with this investment. Mukesh Ambani and his team at Reliance have created an outstanding world leader in retail and technology through their courageous vision, commitment to societal benefits, innovation excellence and relentless execution. 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’s New Commerce strategy could become the disruptor of this decade. We are thrilled to have been invited to partner with Reliance in their mission forIndian Retail.” Last month, Reliance Retail  had acquired Future Group’s retail, wholesale, logistics, warehousing biz in a slump sale. Commenting on the deal with Future, broking firm Motilal Oswal said Reliance Retail’s market share of organised grocery retail would rise to 38 percent from 22 percent earlier. “The organized grocery market, with the only other player being DMart, has now virtually turned into a duopoly market,” the Motilal Oswal report said. “Reliance targets deep penetration in this space, and DMart focuses on the cluster approach. With the entry of giants such as Amazon, Flipkart, and other online players, the cumulative size of the online Grocery market, once ignored for its non-viability, has now reached an estimated stellar scale of Rs 200-250 billion. This may be viewed as the third dominant force in the Retail market. This deal should further aid Reliance in its online venture Jiomart. Through this, the company aims to create a hub-and-spoke model using its deep network of stores as an inventory sourcing warehouse.”