Reliance Retail buys controlling stake in Just Dial for Rs 5.7k crore

Will acquire 25.33% stake via preferential allotment at Rs 1,022.25 a share, another 15.62% from Just Dial founder V S S Mani. It will later make an open offer for 26% as per Sebi rules

Sharpening its e-commerce play, Reliance Retail Ventures Ltd (RRVL) is acquiring a controlling stake in 25-year-old search engine platform Just Dial for Rs 5,719 crore.

RRVL will acquire 25.33 per cent in Just Dial through a preferential allotment at Rs 1,022.25 per share and take another 15.62 per cent from its founder VSS Mani at Rs 1,020 per share.

It will then make an open offer for 26 per cent in accordance with Securities and Exchange Board of India (Sebi) regulations for a consideration of Rs 2,222 crore. Mani will continue as managing director and chief executive of the company.

Collectively, the promoters held 35.32 per cent in Just Dial as on June 30, 2021. Post this deal, they will be left with 10.7 per cent on the expanded capital.

The promoters and other members of the current 'promoter and promoter group' will continue to be classified as 'promoter and promoter group' of Just Dial. However, the company will be under the sole control of Reliance Retail and under the shareholders’ agreement, VSS Mani and Anita Mani, who are currently part of the promoter and promoter group, are required to exercise their voting rights as per the instructions of Reliance Retail.

Reliance Retail Director Isha Ambani said the investment underlines the group's commitment to new commerce

The transaction, which was announced after market hours on Friday, is at a discount of about 5 per cent to Just Dial’s closing price. The Just Dial stock closed at Rs 1,073, down 3 per cent over the previous close.

RRVL is the largest retailer in the country and is expanding its portfolio through acquisition, store opening, and sharpening its omni channel capabilities. The acquisition of Just Dial will help it leverage the database of merchants as it aims to grow three times in the next three to five years and add a million jobs in the near future. The retail division's FY21 revenue stood at Rs 1.53 trillion, nearly six times higher than that of its competitor.

The capital infused by RRVL will help drive the growth and expansion of Just Dial into a comprehensive local listing and commerce platform.

Just Dial would expand discovery on its platform and enhance transactions for millions of products and services. These investments will leverage Just Dial’s existing database of Rs 30.4 million listings

and its existing consumer traffic of Rs  129.1 million quarterly unique users, RRVL said in a statement.

 Isha Ambani, director of RRVL, said, “The investment in Just Dial underlines our commitment to New Commerce by further boosting the digital ecosystem for millions of our partner merchants, micro, small and medium enterprises.”

“Our vision has evolved to not only provide search and discovery but drive commerce across merchants through our B2B platform and enable further consumer to merchant commerce given our platform engagement. Our strategic partnership with Reliance enables us to realize this vision and transform the business,” said Mani, founder of the company.

Analysts and experts tracking the sector were positive on the deal.

Just Dial lacks visibility and the Reliance Retail acquisition will help in generating traffic growth. Reliance will get access to Just Dial’s database of MSMEs and integrating it with Jio Mart will help it to strengthen the e-commerce business," said YES Securities lead analyst Piyush Pandey.