Silver Lake invests $1b in India's Reliance Retail

The private equity firm will take a 1.75% stake in Reliance Retail Ventures on a fully diluted basis, giving the business a pre-money valuation of INR4.21 trillion ($57.3 billion), according to a Reliance Industries.

It was announced earlier this week that Silver Lake had participated in a $500 million round for Bjju’s, an India-based education technology platform that has raised more than $1 billion in private funding this year alone. However, more significant in a Reliance Retail context is Silver Lake’s earlier $1.35 billion investment in Jio Platforms, a Reliance Industries holding company for a range of apps, some nascent broadband and cable services, and India’s leading mobile carrier.

Jio Platforms has raised more than INR1.5 trillion since the start of the year from financial investors as well as strategic players Facebook and Google to support the development of a digital consumer services ecosystem. It underpins an ambitious plan to become India’s dominant internet gateway by offering affordable packages to Reliance Jio’s 388 million-strong mobile subscriber base.

A key tenet of this strategy is e-commerce, with JioMart serving as the online platform through which consumers order daily goods and a network of Jio-branded convenience stores handling the distribution. This offline store network is already being built out, mainly by signing up independent retailers as distributors and putting Jio branding on their storefronts.

There is a natural dovetail with Reliance Retail, operator of India’s largest brick-and-mortar retail network with 12,000 stores nationwide and annual footfall of 640 million shoppers. The company is also pursuing a “new commerce” strategy, which involves the digitization of small-scale merchants. Its goal is to help 20 million merchants – many based in rural areas – apply technology solutions to their retail processes and supply chain infrastructure.

“The success of JioMart in such a short timespan, 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 for Indian retail,” Egan Durban, co-CEO and managing partner of Silver Lake, said in a statement.

Reliance Retail has a combination of neighborhood stores, supermarkets, wholesale outlets, specialty retailers, and online stores. Key assets include Reliance Fresh, Smart and Reliance Market in food and grocery, Reliance Digital and Jio in electronics, and Trends, Project Eve, and Ajio.com in fashion and lifestyle. It also operates stores for international partner brands.

Revenue came to INR1.6 trillion for the 12 months ended March 2020, up from INR1.3 trillion a year earlier. Over the same period, EBITDA rose 55.7% to INR96.5 billion. For Reliance Industries as a whole, revenue and EBITDA came to INR6.6 trillion and INR1 trillion, while net profit was INR443 billion. The parent company is prioritizing its retail, telecom, and digital businesses as a means of reducing its reliance on oil.

Reliance Retail recently agreed to acquire Future Group’s retail and supply chain operations for INR247.1 billion. This includes Future Lifestyle Fashions, a clothing retailer backed by the likes of The Blackstone Group, Aion Capital Partners, L Catterton, PremjiInvest, and Apollo Global Management.

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• Topics
• South Asia
• Expansion
• Consumer
• Technology
• India
• Silver Lake
• Reliance Industries
• Reliance Retail Ventures Limited