Silver Lake picks 1.75% stake in Reliance Retail for Rs 7,500 cr

This marks the second billion-dollar investment by Silver Lake in a Reliance subsidiary after the $1.35 billion investment in Jio Platforms.

US private equity firm Silver Lake Partners has picked up 1.75 per cent stake in the retail arm of Reliance Industries for Rs 7,500 crore, the Indian firm said in a statement.

"Reliance Industries Limited and Reliance Retail Ventures Ltd (RRVL) announced today that Silver Lake will invest Rs 7,500 crore into RRVL, a subsidiary of Reliance Industries," the statement said.

This investment values RRVL at a pre-money equity value of Rs 4.21 lakh crore. Silver Lake's investment will translate into a 1.75 per cent equity stake in RRVL on a fully diluted basis.

This marks the second billion-dollar investment by Silver Lake in a Reliance Industries subsidiary after the $1.35 billion investment in Jio Platforms announced earlier this year.

"Reliance Retail Limited, a subsidiary of RRVL, operates India's largest, fastest growing and most profitable retail business serving close to 640 million footfalls across its about 12,000 stores nationwide," the statement said.

With more than $60 billion in combined assets under management and committed capital and a focus on the world's great tech and tech-enabled opportunities, Silver Lake is the global leader in large-scale technology investing.

Its other investments have included Airbnb, Alibaba, Alphabet's Verily and Waymo units, Dell Technologies, Twitter and numerous other global technology leaders.

After monetising Jio Platforms -- which houses the firm's telecom arm and digital ventures, richest Indian Mukesh Ambani is looking to rope in investors in the retail business. Reliance may be looking to sell about 10 per cent of Reliance Retail.

Late last month, Reliance acquired the retail and logistics businesses of Future Group for Rs 24,713 crore to boost its retail vertical.

Silver Lake was the first US private equity firm to invest in Jio after tech giant Facebook took a 9.99 per cent stake in the company for Rs 43,573.62 crore.

Silver Lake bought 2.08 per cent in Jio in two tranches for a total of Rs 10,202.55 crore.

Rival private equity groups KKR, Vista and General Atlantic followed Silver Lake to take stakes in Jio.

Other notable investors included Google and Abu Dhabi's sovereign wealth fund Mubadala.

All investors in Jio Platforms including Silver Lake have been offered a chance to explore investing in Reliance Retail.

Ambani had at Reliance Industries' recent annual general meeting stated that it had been approached by strategic/financial investors for a stake in Reliance Retail.

Commenting on the transaction with Silver Lake, Ambani, Chairman and Managing Director, Reliance Industries, said, "I am delighted to extend our relationship with Silver Lake to our transformational efforts of building an inclusive partnership with millions of small merchants while providing value to Indian consumers across the country in the Indian retail sector."

"We believe technology will be key to bringing the much-needed transformation in this sector so that various constituents of the retail ecosystem can collaborate to build inclusive growth platforms. Silver Lake will be an invaluable partner in implementing our vision for Indian Retail," he said.

Commenting on the investment, Egon Durban, Co-CEO and Managing Partner of Silver Lake, said, "We are pleased to deepen our relationship with Reliance with this investment.

“Mukesh Ambani and his team at Reliance have created an outstanding world leader in retail and technology through their courageous vision, commitment to societal benefits, innovation excellence and relentless execution."

"The success of JioMart in such a short time span, especially while India, along with the rest of the world, battles the COVID-19 pandemic, is truly unprecedented, and the most exciting growth phase has just begun. Reliance's new commerce strategy could become the disruptor of this decade.

“We are thrilled to have been invited to partner with Reliance in their mission for Indian Retail," Durban said.

The transaction is subject to regulatory and other customary approvals.

Morgan Stanley acted as financial advisor to Reliance Retail and Cyril Amarchand Mangaldas and Davis Polk & Wardwell acted as legal counsel. Latham & Watkins and Shardul Amarchand Mangaldas & Co acted as legal counsel for Silver Lake.

Photograph: Danish Siddiqui/Reuters