Building an empire: Reliance joins top league of PE players with bold bets

Spends $5.7 bn on stakes and acquisitions in four years; $9 bn if Future deal cleared

Reliance has spent $5.7 billion on acquisitions and investments across various sectors over the past four years, the latest being its acquisition last week of a majority stake in the luxury hotel Mandarin Oriental in New York for $98.2 million and a 25.8 per cent stake in Dunzo, a hyperlocal delivery platform, for $200 million.

Its investments would have hit $9 billion if its deal to acquire Future Group’s retail business, which is mired in a legal battle for control with Amazon, had been cleared.

Notwithstanding the setback over Future, Reliance is rubbing shoulders with the largest global private equity players who have invested in India.

These include SoftBank, which has invested $14 billion in India over a decade, and Prosus, the digital arm of Naspers, which has invested $6 billion since 2005 and which will reach $10 billion once it gets clearance for its acquisition of BillPay.

In contrast to private equity players, Reliance’s investments have been concentrated largely over the past four years. And unlike them, it is not looking at exits or selling its holdings to make return on investments for its investors. 
 

As part of its clear shift in its strategy to avoid doing everything on its own as it did earlier, analysts say Reliance’s investments and acquisitions are part of a larger plan to fill in technology gaps.

The firm is also looking to save the time that organic growth requires, and grow businesses – telecom, retail, renewables, media and entertainment – faster with partners wherever possible.

In 2021, Reliance invested $1.8 billion in a host of companies either by taking stakes or going for outright acquisitions. They included six renewable energy companies (its big new area of growth) and Just Dial ($767 million).

The figure of $1.8 billion is not a long way off from the $2.48 billion which Blackstone’s three fund managers, who are the top ten PE investors in 2021 in India based on the data by VCCEdge, invested collectively.

Reliance’s figure is also respectable when compared with the $4.14 billion which US-based TFCC International invested and higher than what CPP Investment Board, Baring Private Equity Asia, Advent International, and Tiger Global Management invested. These are also in the top ten list.

Reliance also made a big foray in many other areas in 2021, especially in fashion where it bought stakes in fashion design houses where the deal size has not been disclosed. These include stakes in companies run by designers Ritu Kumar, Manish Mahotra and Anamika Khanna. In addition, it bought Amante and Zivame which are in the lingerie business.

It also acquired online milk delivery platform Milkbasket for an undisclosed sum. Reliance’s largest investments are still in telecom and the internet. According to data from the company and Morgan Stanley estimates, it has put $2.5 billion in these two sectors.

Coming up a close third is the company’s new energy business. Last year saw a flurry of global acquisitions as Reliance shifted its focus from oil and gas to renewables. It has spent $1.3 billion in this sector, including $771 million for acquiring solar cell and panel manufacturer REC Solar Holdings last October.    

As for retail, even after buying a stake in Dunzo, its investments in this sector have not hit $1 billion. Yet this could all change dramatically if its acquisition of the $3.3 billion Future group is approved by the courts.