RIL soars 3% as KKR to pick 1.28% stake in Reliance Retail for Rs 5,550 cr

This marks the second investment by KKR in a Reliance subsidiary following Rs 11,367 crore-investment in Jio Platforms announced earlier this year

Shares of Reliance Industries (RIL) surged 3 per cent to Rs 2,276.50 on the BSE in the early morning deal on Wednesday after the company announced that global investment firm KKR will invest Rs 5,550 crore in Reliance Retail Ventures (RRVL) for 1.28 per cent equity share. The stock hit a record high of Rs 2,368.80 on September 16, 2020.

KKR's investment marks second investment by the investment firm in a Reliance subsidiary, following Rs 11,367 crore-investment in Jio Platforms announced earlier this year. KKR's investment values Reliance Retail at a pre-money equity value of Rs 4.21 trillion.

"KKR has a proven track record of being a valuable partner to industry-leading franchises and has been committed to India for many years. We look forward to working with KKR’s global platform, industry knowledge and operational expertise across our digital services and retail businesses," Mukesh Ambani, chairman and managing director of RIL said in a statement. READ HERE

Earlier this month, Silver Lake had announced to invest Rs 7,500 crore into RRVL. These investments come on the back of the company announcing the acquisition of the retail, wholesale, logistics and warehousing business from the Future Group on a slump sale basis.

Reliance Retail, a subsidiary of RIL, operates India's largest, fastest growing and most profitable retail business serving close to 640 million footfalls across its around 12,000 stores nationwide. RRVL reported a consolidated turnover of Rs 162,936 crore ($ 21.7 billion) and net profit of Rs 5,448 crore ($ 726.4 million) for the year ended March 31, 2020.

Jyoti Roy - DVP- Equity Strategist, Angel Broking expects the company to attract further investments in the retail business from other investors which will help consolidate its dominant position in the retail business. The brokerage firm remains positive on RIL and expects that the digital and the retail business to be the future growth drivers for the company. "Further investments in the retail business and scaling up of Jio Mart business will be key triggers for the company in the near future. Listing of the digital and retail business over the next few years would also lead to significant value unlocking for shareholders in the long run," the brokerage said.

In another development, Reliance Jio, India's largest mobile service provider, on Tuesday announced a range of postpaid plans, including many firsts such as in-flight mobile connectivity, to make a dent in its rivals' businesses. Jio Platforms is the digital services arm of RIL which houses telecom company Reliance Jio Infocomm.. CLICK HERE TO READ FULL REPORT