KKR increases Reliance Retail stake with new $250Mn investment

Global investment major KKR has upped its stake in Mukesh Ambani’s Reliance Retail Ventures with an additional investment of ₹2,069.50 crore (nearly $250 million), which elevates the valuation of the company to a staggering $100 billion. This follow-on investment boosts KKR’s equity stake in Reliance Retail to 1.42% on a fully diluted basis owing to the additional equity stake of 0.25% in Reliance Retail by KKR.

This development is unsurprising – Reliance Retail Ventures, part of Ambani’s conglomerate Reliance Industries, operates nearly 18,500 stores spanning various sectors, from groceries to electronics. It has also forged foreign partnerships with renowned brands such as Jimmy Choo, Marks & Spencer, and Pret A Manger. Three years ago, Reliance Retail had raised $5.71 billion by selling a stake of 10.09% to investors, including KKR.

And in recent times, Reliance Retail has been on an acquisition spree – it has been actively expanding its business through acquisitions and obtaining franchise rights for leading international brands in the Indian market. Its goal is to achieve annual sales of $6 billion within five years. Additionally, it’s investing in scaling up its infrastructure and recently acquired the Indian operations of German retail giant Metro Cash and Carry. The financials speak in its favour as well – Reliance Retail reported a consolidated net profit of ₹91.81 billion ($1.11 billion) for the financial year ending in March 2023, while its revenue reached a staggering ₹2.6 trillion.

“Throughout our investment period in Reliance Retail, we have been impressed by the company’s vision and extensive work to empower retailers across India through digitalization, as well as by its resilience and performance in spite of the pandemic and other disruptions,” Joe Bae, co-CEO of KKR, said in a statement.

“We highly value our deepening partnership with KKR, and their latest investment in RRVL after their previous investment further reinforces their strong belief in RRVL’s vision and capabilities,” Isha Ambani said in a statement. “We look forward to continued engagement with KKR and to benefit from their global platform, industry knowledge and operational expertise, in our journey towards driving transformation of the Indian retail sector.”

Furthermore, earlier reports teased this development, revealing that Reliance was in advanced talks with global investors to raise around $2.5 billion by the end of this month and ahead of a potential stock market listing. It also comes after the $1 billion that Reliance Retail had raised from Qatar Investment Authority (QIA) last month. At that time, the investment secured QIA a stake of 0.99% in Reliance Retail Ventures.

KKR had previously invested ₹55.5 billion ($669 million at current rates) in Reliance Retail three years ago, when the company was valued at approximately $52 billion. The fresh investment in Reliance Retail comes primarily from KKR’s Asian Fund IV and is currently subject to regulatory approvals. Morgan Stanley acted as financial adviser to Reliance Retail in this investment.