After Qatar, another oil Gulf sovereign fund, Abu Dhabi Investment Authority (ADIA), is going to buy additional stake in Mukesh Ambani's huge retail empire. According to the information, ADIA is going to invest $600 million in Reliance Retail, which is much higher than the valuation of the round finished three years ago. ADIA is already an investor in Reliance Retail Ventures (RRVL). The company had purchased 1.2 percent stake in October 2020 for Rs 5,512.50 crore ($751 million). At that time Mukesh Ambani had raised Rs 47,265 crore by selling 10.09 percent stake in his retail business. Saudi PIF, Mubadala, Singapore's GIC, Silverlake, TPG and GA were included in that round.
How many have invested?
Among the three-year-old group of investors, KKR has already made follow-on investment of Rs 2,069.50 crore at a pre-money equity value of Rs 8.361 lakh crore ($100 billion). After which RRVL has joined the top 4 companies of the country in terms of market cap. So far, Qatar's $1 billion investment has been the only new investment in the current round of fund raising. The current valuation is at about a 60 per cent premium compared to the last funding round three years ago, which is considered significantly undervalued. AllianceBernstein analysts had recommended a valuation of $131 billion for Reliance Retail in May.
How will a 148 billion dollar company be created?
Interestingly, Reliance Industries had estimated the valuation of RRVL at $148 billion in early July. At that time the company had decided to buy out minority shareholders and employee stock option holders, who collectively held 0.09 percent stake. RRVL holds 99.91 percent stake in Reliance Retail Limited. It intends to buy back the remaining shares at Rs 1,362 per unit, which is 60 per cent more than the valuation given by EY and BDO. With this premium, the value of Reliance Retail Limited will reach 148 billion dollars.
Reliance is the 12th largest retail company in the world
With a valuation of $100 billion, Reliance Retail is the 12th largest retail company in the world. According to Bloomberg data, Amazon, LVMH, Walmart, Home Depot and Alibaba are the top 5 largest retailers in terms of market cap. Even though Reliance Industries Chairman Mukesh Ambani has not disclosed any figures publicly, he had told shareholders during the recent AGM that many major investors have shown interest in Reliance Retail. Recent media reports suggest that Reliance is looking to raise funds between $1.5 to $4 billion, which many are seeing as a valuation benchmark-setting exercise ahead of the final listing.
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