This Gulf fund is considering additional investments of $600 mn in RRVL

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After Qatar Investment Authority (QIA), another sovereign fund from the Gulf region, Abu Dhabi Investment Authority (ADIA) is considering buying an additional stake of $600 million in Reliance Retail Limited (RRL), The Economic Times (ET) reported, citing people in the know. The development is significant since the fresh investments will be made at significantly higher valuations.


ADIA already holds a 1.20 per cent stake in Reliance Retail Ventures Limited (RRVL), which it bought in October 2020 for Rs 5,512.50 crore ($751 million). Reliance Retail raised Rs 47,265 crore in October 2020 by selling a 10.09 per cent stake to investors such as Saudi PIF, Mubadala, GIC, Silverlake, TPG, and GA, the ET report said.

From earlier investors, Kohlberg Kravis Roberts (KKR) has made an additional investment of Rs 2,069.50 crore at a pre-money equity value of Rs 8.361 trillion ($100 billion), which makes RRVL rank among the top four companies by market cap in India. So far, QIA’s $1 billion investment has been the only fresh investment in the current round of fundraising, the report said.

Also Read: Reliance Retail receives full subscription amount of Rs 2,069 cr from KKR


How do analysts see RRVL?


The current valuation of Reliance’s retail business is about a 60 per cent premium to the last fundraising three years ago. However, in the eyes of most analysts, Reliance Retail is much more valuable even after the added premium. For example, analysts at AllianceBernstein put Reliance Retail at $131 billion in May, the ET report added.


Besides, Reliance Industries itself valued its retail business at $148 billion when it decided to buy out minority stake and employee stock option holders who collectively owned 0.09 per cent. This was done at a 60 per cent premium to the valuations determined by two independent entities – Ernst & Young and BDO Valuation, both of which valued Reliance Retail at $93 billion and $97 billion, respectively.


How big is Reliance Retail?


Valued at $100 billion, Reliance Retail is the 12th largest retail business in the world, ahead of giants like JD.com, Target, Midea, and Lululemon. Amazon, LVMH, Walmart, Home Depot, and Alibaba are the top five in terms of market value, according to the ET report, which cited data from Bloomberg.


Reliance Retail posted a revenue of Rs 2,60,364 crore in the financial year 2022-23 (FY23), a year-on-year growth of 30 per cent, with an EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) of Rs 17,928 crore. The company registered a net profit of Rs 9,181 crore for FY23, the ET report said.