Mubadala picks up 1.4% stake in Reliance Retail for Rs 6,247 crore

This would take the combined investment by Silver Lake and its co-investors in Reliance Retail to Rs 9,375 crore in exchange for a 2.13 per cent stake

Reliance Retail
Companies backing Jio Platforms are also investing in the retail arm

Reliance Industries (RIL) on Thursday said Abu-Dhabi-based sovereign fund Mubadala would invest Rs 6,247.5 crore into subsidiary Reliance Retail for a 1.4 per cent stake. 

This is the fifth deal to be announced by the Mukesh-Ambani-led firm in three weeks, stepping up its stake sale process that has seen marquee investors back the firm so far. The valuation of the firm, however, remains at Rs 4.2 trillion, a worrying sign, said sector experts.

Analysts were expecting the valuation of the firm to touch at least Rs 4.5 trillion, as the stake sale process proceeded. It hasn't happened. 

On Thursday, RIL closed trade at Rs 2225.05 per share on the BSE, down 0.39 per cent over the previous day's close. So far, Reliance Retail has raised Rs 24,847.5 crore in five rounds offloading 5.65 per cent stake to investors. Analysts said Reliance would likely complete small deals with financial investors before inducting a strategic investor into the company, critical if it requires a strong partner for its backend and supply-chain management. 

On Wednesday, the company announced two transactions, one by General Atlantic for Rs 3,675 crore, who would pick up a 0.84 per cent stake in the company. The second was by the co-investors of private equity giant Silver Lake, who would invest an additional Rs 1,875 crore into Reliance Retail. 

This would take the combined investment by Silver Lake and its co-investors in Reliance Retail to Rs 9,375 crore in exchange for a 2.13 per cent stake. 

Last week, KKR had put Rs 5,550 crore for a 1.28 per cent in the firm. Speculation is rife that Abu Dhabi Investment Authority could be next in line. However, a RIL spokesperson said it could not comment on market speculation. 

“As a policy we do not comment on media speculation. Our company evaluates various opportunities on an ongoing basis. We have made and will continue to make necessary disclosures in compliance with our obligations under Sebi and our agreements with the stock exchanges,” the spokesperson said.

Reliance Retail though has given the option to investors in Jio Platforms to consider backing the former as it seeks to unlock value. So far, the investors in Reliance Retail are those that have invested in Jio Platforms earlier. Reliance Retail remains the largest organised retail player in the country, with the company recently announcing the acquisition of the retail, wholesale and logistics assets of the Future group in a Rs 25,000-crore transaction.

In a statement, Ambani, who is chairman and managing director of RIL, said Mubadala was a "valued investor", who was committed to the Indian market. 

Along with Jio, retail contributes 35 per cent to RIL's consolidated earnings before interest tax depreciation and amortisation (Ebitda), Ambani had said at the firm's annual general meeting in July. Reliance had offloaded nearly 33 per cent stake in Jio Platforms to 14 investors for Rs 1.52 trillion between April and June, emerging as the only company in the country to go in for a massive monetisation exercise during lockdown.

Ambani had indicated at the AGM that “global partners and investors” were also keen to invest in Reliance Retail and that they would be inducted into the company in the forthcoming quarters.