Mumbai: In a bid to tap into India's rapidly growing retail market, Qatar's sovereign wealth fund, Qatar Investment Authority (QIA), is reportedly in early discussions to acquire a minority stake in Reliance Retail Ventures, the retail unit of billionaire Mukesh Ambani's Reliance Industries Ltd. The stake purchase is said to be valued at approximately USD 1 billion (Rs 8,200 crore), according to sources familiar with the matter.
The talks, which are currently at a preliminary stage, are being led by an executive director on the board of Reliance Industries Ltd. If the deal comes to fruition, QIA would join other oil-rich Gulf nations' sovereign wealth funds, including Saudi Arabia's Public Investment Fund (PIF) and Abu Dhabi Investment Authority (ADIA), which invested in Reliance Retail Ventures in 2020.
Last year, PIF invested USD 1.3 billion for a 2.04 per cent stake, while ADIA and the UAE's Mubadala invested Rs 5,513 crore and Rs 6,248 crore, respectively, for smaller stakes in the company. A group of global investors, such as KKR, Silver Lake Partners, General Atlantic, GIC, and TPG, also poured in Rs 47,265 crore to acquire a 10.09 per cent stake in Reliance Retail Ventures during that time.
Reliance Retail Ventures, which is 85 per cent owned by Reliance Industries, is the leading retailer in India, spanning a diverse range of products from luxury fashion to groceries. The company has been aggressively expanding its business by acquiring other companies and securing franchise rights for leading international brands in the Indian market.
In 2020, the company raised Rs 47,265 crore from global private equity funds, valuing Reliance Retail Ventures at more than Rs 4.2 lakh crore. Earlier this month, the company reportedly hired two global consultants who valued the retail unit between USD 92-96 billion.
Commenting on the ongoing talks with Qatar's wealth fund, JP Morgan emphasized that this highlights the multiple stake sale options available across Reliance's various businesses. For Reliance to achieve its goal of doubling its value over the next four years, it would involve unlocking value from significant investments made in segments like retail and Jio, as well as potential stake sales or listings of some businesses.
While Reliance has previously sold strategic stakes in its oil and gas exploration and production (E&P) business and financial stakes in retail, it has not yet sold any stake in its newer businesses like New Energy. The company has also built a notable real estate portfolio.
The potential investment from Qatar's sovereign wealth fund represents a significant opportunity for both Reliance and QIA to leverage the tremendous growth potential in the Indian retail market. However, the discussions are still in the early stages, and further developments remain to be seen as the negotiations progress.