QIA Commits $1B Investment to Reliance Retail, Valuing the Company at $100B
- ByStartupStory | August 24, 2023
Qatar’s sovereign wealth fund is set to invest $1 billion in Reliance Retail as India’s largest retail chain seeks to expand its operations and venture into new categories. This investment secures Qatar Investment Authority a 0.99% stake in Reliance Retail Ventures, giving the Indian company a valuation of $100 billion.
Reliance Retail, which encompasses 18,500 stores and digital commerce platforms selling a diverse range of products from electronics to fashion and pharmaceuticals, was last valued at $62.4 billion in 2020. The valuation followed a fundraising round of over $6 billion, including investments from Saudi Arabia’s Public Investment Fund and private equity behemoth KKR.
This funding arrives at a pivotal juncture for Reliance Retail, as it embarks on expansions into fresh categories, including budget-friendly fast fashion, and contemplates a potential public listing. The company, which recently formed a partnership with Shein to aid the reentry of the Chinese e-commerce firm into India, has integrated several other businesses into its fold.
Recognizing the growth potential in India’s rapidly expanding retail market, the Qatar fund has previously backed companies like food delivery startup Swiggy, edtech platform Byju’s, and food company Rebel.
Mansoor Ebrahim Al-Mahmoud, CEO of QIA, stated, “We are looking forward to Reliance Retail Ventures Limited, with its strong vision and impressive growth trajectory, joining our growing and diverse portfolio of investments in India.”
Reliance Retail has also penetrated the e-commerce domain in recent years, even collaborating with Meta’s WhatsApp to sell groceries through the messaging app. While Walmart-owned Flipkart and Amazon India currently lead the local e-commerce sector, analysts predict that Reliance Retail will eventually outperform both these giants.
AllianceBernstein projected that Reliance’s substantial retail network, comprehensive mobile network, digital ecosystem, and an advantageous position within India’s regulatory landscape will enable it to outpace online rivals.
JPMorgan analysts noted, “We believe the operating earnings downgrade cycle for RIL [Reliance Industries] is likely behind us, with energy driving FY24 and consumer pick-up likely in FY25. Jio+Retail capex should fall sharply from FY25 even as earnings pick up. Beyond earnings, we believe potential value-unlocking via stake sales/IPO/listings could be a material stock price driver over the next 2-3 years.”
Reliance Industries, which holds the majority of Reliance Retail Ventures and holds the largest market capitalization in India, has extensively diversified into various sectors, including telecom and on-demand video streaming, over the last decade to reduce its reliance on oil. Mukesh Ambani’s daughter, Isha Ambani, spearheads the retail business.
Isha Ambani stated, “The investment by QIA is a strong endorsement of a positive outlook towards the Indian economy and Reliance’s retail business model, strategy, and execution capabilities.”
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