KKR commits an additional $250m to India's Reliance Retail
KKR has agreed to re-up in India’s Reliance Retail, committing another INR 20.6bn (USD 250m) on top of the INR 55bn it put into the neighbourhood store-to-supermarket operator three years ago.
This is the second disclosed investment in what appears to be Reliance Retail’s latest wave of private funding, following a INR 82.8bn injection from Qatar Investment Authority (QIA) three weeks ago. The initial wave of funding in 2020 saw eight participants contribute INR 472.7bn.
KKR’s investment gives Reliance Retail a pre-money equity value of INR 8.36trn or approximately USD 100bn, making the target one of the four largest companies in India by equity value, according to a statement. It represents a 99% increase in the previous round’s valuation. KKR’s stake in Reliance Retail will rise by 0.25% to 1.42% on a fully diluted basis.
Reliance Retail operates India’s largest, fastest-growing, and most profitable retail business with more than 18,500 stores and digital commerce platforms across grocery, consumer electronics, fashion and lifestyle, and pharma. It claims 267m loyalty programme customers.
Revenue reached INR 2.6tn for the 12 months ended March 2023, up 30% year-on-year. Growth was driven by an acceleration of store network expansion. Net profit also rose 30%, hitting INR 91.8bn.
Reliance Retail and Jio Platforms are spearheading parent company Reliance Industries’ “new commerce” strategies. For Reliance Retail, this means driving supply-side digitisation by helping 20m merchants – many based in rural areas – apply technology solutions to retail processes and supply chain infrastructure. More than 3m small-scale, unorganised merchants have been digitised so far.
Jio Platforms – the holding company for a range of apps, some nascent broadband and cable services, and India’s leading mobile carrier – is responsible for the demand side, packaging e-commerce into a broader digital offering.
Reliance Retail’s first funding round was preceded by a USD 20bn fundraising effort from Jio Platforms, of which USD 9.9bn came from 11 private equity investors. KKR invested USD 1.5bn in Jio Platforms. Silver Lake, Mubadala Investment, Abu Dhabi Investment Authority (ADIA), TPG Capital, General Atlantic, and Saudi Arabia’s Public Investment Fund also backed both companies.
“Throughout our investment period in Reliance Retail, we have been impressed by the company’s vision and extensive work to empower retailers across India through digitalisation, as well as by its resilience and performance in spite of the pandemic and other disruptions,” said Joe Bae, co-CEO of KKR.
“We look forward to continuing to work alongside the Reliance Retail team to support the company’s mission to build a more inclusive Indian retail economy.”
KKR’s investment comes primarily from the firm’s fourth pan-Asian fund, which closed at USD 15bn in 2021.
Morgan Stanley served as Reliance Retail’s financial advisor on the transaction, with Cyril Amarchand Mangaldas and Davis Polk providing legal counsel.
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