Sovereign wealth funds bullish on RRVL as valuation doubles in three years

RIL retail arm in talks with global investors to raise $2.5-3 billion

Reliance Retail Ventures Ltd (RRVL), which is looking to raise $2.5-3 billion from global investors ahead of a potential listing on the stock exchanges, has become a hot favourite of sovereign wealth funds (SWFs) with its valuation doubling in the last three years.

Last month, the Qatar Investment Authority (QIA) picked up a 0.99 per cent stake in RRVL for $1 billion, valuing the retail arm of Reliance Industries at $100 billion (about Rs 8.3 trillion). The latest valuation is almost double the value at which four sovereign funds had invested in the company in 2020.

According to sources, RRVL is in talks with sovereign funds like Mubadala, Public Investment Fund (PIF) of Saudi Arabia, Abu Dhabi Investment Authority (ADIA), and GIC of Singapore, which are existing investors in the company, besides a few private equity firms. After the QIA deal, sovereign funds account for 63 per cent of the funds raised by Reliance Retail since 2020, underlining their bullishness about the company.

A Reliance spokesperson said the company would not comment on media speculation or rumours. 

SWFs have invested Rs 35,104 crore to date in RRVL for a 6.72 per cent stake. At the group level, SWFs have collectively invested around Rs 68,805 crore ($8.2 billion) in the last three years, which is among the highest investments in an Indian business house. This also includes Reliance Jio, where the total money invested by SWFs is at Rs 26,143 crore for a 5.33 per cent stake. 

The other area that SWFs have invested in is the company’s fibre and digital assets. In October 2020, ADIA and PIF together invested Rs 7,558 crore for a 51 per cent stake in the InvIT called Digital Fibre Infrastructure Trust. Sources say they invested an equal amount of money.

Also, GIC, together with PE fund Brookfield and some other partners, bought a 100 per cent stake in Reliance’s tower business for Rs 25,214 crore. However, the equity division between the players has not been disclosed.

PIF is the largest investor in Reliance entities with an exposure of Rs 24,700 crore, followed by Mubadala (Rs 15,340 crore), and ADIA (Rs 14,974 crore). 

The big bets by SWFs, especially from West Asia, were seen for the first time in 2020, when due to their investments in Reliance, PIF catapulted into the largest PE/SWF investor in the country, and GIC and ADIA were at the top 10 list of investors. The total deals made by Reliance Jio and Reliance Retail accounted for 40 per cent of all deals for the calendar year.