Reliance Retail Ventures Ltd. (RRVL) announced on Wednesday that Qatar Investment Authority will be investing a sum of Rs 8,278 crore in the company for a 0.99 percent stake.

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The investment will value Reliance Retail at Rs 8.27 lakh crore, which ranks among the top four companies by total equity value in the country.

Qatar Investment Authority will be making the investment through its wholly-owned subsidiary.

This is Reliance Retail's first fund raising round after a period of three years. Earlier, the retail unit of Mukesh Ambani-led Reliance Industries had raised a sum of Rs 47,265 crore from various global investors at a pre-money equity valuation of Rs 4.21 lakh crore.

"We look forward to benefitting from QIA's global experience and strong track record of value creation as we further develop Reliance Retail Ventures Ltd. into a world class institution, driving transformation of the Indian Retail Sector," RRVL Director Isha Mukesh Ambani was quoted as saying.

Morgan Stanley acted as a financial advisor to Reliance Retail Ventures Ltd. and Cyril Amarchand Mangaldas and Davis Polk & Wardwell acted as legal counsels. Goldman Sachs acting as a financial advisor to Reliance Industries, advised on the process and transaction structuring.

"QIA is committed to supporting innovative companies with high-growth potential in India's fast-growing retail market. We look forward to Reliance Retail Ventures Ltd., with its strong vision and impressive growth trajectory, joining our growing and diverse portfolio of investments in India," QIA CEO Mansoor Ebrahim Al-Mahmoud said.

The deal's valuation is largely in-line with analyst estimates of around $100 billion for Reliance Retail. While JM Financial values Reliance Retail at $105 billion, JPMorgan values it at $110 billion.

As per a Reuters report, Reliance had appointed independent valuers EY & BDO, who valued the retail business at $96 billion and $92 billion respectively.

Reliance Retail was in focus last month after Reliance Industries announced that it will make the retai unit fully promoter-owned by paying shareholders Rs 1,362 per share.

Based on the trailing 12-month data, Reliance Retail had a revenue of Rs 2.71 lakh crore and operating profit of Rs 19,276 crore. The business will benefit from a gradual recovery in consumer sentiment, while increased store footprint and operating leverage will drive improvement in its operating profit.

Here are the key triggers for Reliance Retail going forward:

- Expansion of the FMCG brand - Independence

- Entered persoal care categories in the FMCG space

- Launched the beauty platform - Tira

- Growth in beverage portfolio which has grown 11 times after launch of Sosyo and Campa Cola

- Metro AG's India business scaling up

First Published:Aug 23, 2023 4:20 PM IST