Reliance buys controlling stake in Just Dial for Rs 3497 cr

Reliance Retail Ventures Ltd (RRVL) on Friday said it will acquire 40.95 per cent stake in Just Dial for Rs 3,497 crore, bolstering its digital play in the rapidly growing online commerce market in India.

Reliance's investment in Just Dial, a 25-year old information search and listing company, is part of the telecom to petrochemicals conglomerate's digital bet.

Over the past many quarters, Reliance has announced a number of investments in companies like Netmeds, Urban Ladder and others.

RRVL - the retail arm of Reliance Industries Ltd - will also make a public announcement for an open offer for acquiring up to 2.17 crore equity shares of Just Dial (representing 26 per cent share in the company), in accordance with Sebi Takeover Regulations, a regulatory filing said.

Just Dial founder VSS Mani will continue as managing director and chief executive officer to lead the company through the next phase of growth, it added.

The transaction is subject to shareholder and other customary closing conditions and approvals.

RRVL director Isha Ambani said the investment in Just Dial underlines the company's commitment to “new commerce” by further boosting the digital ecosystem for millions of its partner merchants, micro, small and medium enterprises.

“We look forward to working with the highly experienced management team of Just Dial as we further expand the business going forward,” she added.

Notably, Just Dial has recently launched its B2B marketplace platform JD Mart that is working on enabling manufacturers, distributors, wholesalers and retailers in the country to become internet-ready and sell their products online.

Mani said nearly 25 years ago, he had the vision to build a connected single platform dedicated to providing fast, free, reliable and comprehensive information to our users and connect buyers to sellers.

“Our vision has evolved to not only provide search and discovery but drive commerce across merchants through our B2B platform and enable further consumer to merchant commerce given our platform engagement.

“Our strategic partnership with Reliance enables us to realise this vision and transform the business going forward,” Mani added.

The agreement between RRVL, Just Dial Ltd, and VSS Mani and others, entails preferential allotment of 2.12 crore equity shares (equivalent to 25.33 per cent post preferential share capital) at Rs 1,022.25 per share, and acquisition of 1.31 crore equity shares by RRVL from VSS Mani (15.62 per cent post preferential share capital) at Rs 1,020 per share.

It also entails shareholders agreement, governing certain inter se rights and obligations between the parties, it added.

The capital infused by RRVL will help drive the growth and expansion of Just Dial into a comprehensive local listing and commerce platform.

Just Dial has an existing database of about 30.4 million listings and its existing consumer traffic of about 129.1 million quarterly unique users (as of March 31, 2021), the filing said.

Just Dial will expand discovery on its platform and enhance transactions for millions of products and services, it added.

Last year, Reliance Retail had executed India's largest fundraising in the retail sector, raising Rs 47,265 crore from global investors. It reported a consolidated turnover of Rs 157,629 crore ($21.6 billion) and a net profit of Rs 5,481 crore ($750 million) for the year ended March 31, 2021.

Flush with funds, RRVL has been aggressively bolstering its digital play. It has invested in online pharmacy Netmeds (Rs 620 crore in August 2020), online furniture retailer Urban Ladder (Rs 182 crore in November 2020) and online lingerie retailer Zivame, stepping up its play into the fast-growing e-commerce segment.

In August 2020, RRVL had also announced plans to acquire the retail and wholesale business, and the logistics and warehousing unit of Future Group for Rs 24,713 crore.

The transaction is, however, pending after US e-commerce major Amazon contested the deal.

RRVL, which has been ramping up its e-commerce venture JioMart, had recently shared plans of onboarding over one crore merchant partners over the next three years.

JioMart competes with platforms like Amazon, Walmart-owned Flipkart and others in the burgeoning e-commerce segment in India.

Just Dial's local search engine platform provides search-related services to users across India through multiple platforms such as website, apps, via telephone and text.

Its B2B marketplace platform JD Mart offers digital product catalogues to businesses and aims at digitalising India's businesses, especially MSMEs, across categories.

Just Dial also announced its financial results for the quarter ended June 30, 2021, on Friday.

It reported a loss of Rs 3.52 crore in the reported quarter against a net profit of Rs 83.32 crore in the June 2020 quarter.

Its revenue from operations rose 1.83 per cent to Rs 165.41 crore in the first quarter of FY22 from Rs 162.43 crore in the year-ago period.

Morgan Stanley acted as the financial advisor, JM Financial as a manager to the open offer, Shardul Amarchand Mangaldas and Khaitan & Co as legal advisors and Deloitte as accounting and tax advisors to RRVL.

Goldman Sachs acted as an exclusive financial advisor, Cyril Amarchand Mangaldas as legal advisor and Ernst & Young provided tax advisory and diligence services to Just Dial and its promoters.