KKR to invest $755m in India's Reliance Retail

The private equity firm will take a 1.28% stake in Reliance Retail Ventures on a fully diluted basis, giving the business a pre-money valuation of INR4.21 trillion. Two weeks ago, Silver Lake invested $1 billion on the same terms, adding to its own $1.35 billion commitment to Jio Platforms.

KKR is making the investment from its Asia private equity funds. The firm is currently in the market with its fourth pan-Asian vehicle, which has a target of $12.5 billion. KKR said in its second-quarter earnings call that commitments stood at approximately $11 billion, including capital from initial closings through July. The $1.5 billion investment in Jio Platforms – announced in May – was the firm’s largest in Asia to date.

Between April and July, Jio Platforms – which owns a range of apps, some nascent broadband and cable services, and India’s leading mobile carrier – raised around INR1.5 trillion across a series of transactions involving brand-name financial investors as well as strategic players Facebook and Google. It is expected a similar scenario will now play out with Reliance Retail.

Reliance Industries wants Jio Platforms to serve as the foundation of a digital consumer services ecosystem. 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 an 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.

“We are pleased to deepen our relationship with Reliance Industries through this investment in Reliance Retail Ventures, which is empowering merchants of all sizes and fundamentally changing the retail experience for Indian consumers. Reliance Retail’s new commerce platform is filling an important need for both consumers and small businesses as more Indian consumers move to shopping online and the company offers tools for Kiranas to be a critical part of the value chain,” Henry Kravis, co-founder and CEO of KKR, 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.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• South Asia
• Consumer
• Expansion
• India
• KKR
• Reliance Industries