Mubadala to invest ₹ 6,247.5 crore in Reliance Retail Ventures

Reliance Industries Limited and Reliance Retail Ventures Limited announced today that Mubadala Investment Company (Mubadala), the Abu Dhabi-based sovereign investor, will invest ₹ 6,247.5 crore (AED 3.1 billion) into Reliance Retail Ventures Limited (RRVL), a subsidiary of India’s Reliance Industries Limited (Reliance Industries). The investment values Reliance Retail at a pre-money equity value of ₹ 4.285 lakh crore. Mubadala’s investment will translate into a 1.40% equity stake in RRVL on a fully diluted basis.

This marks the second significant investment by Mubadala in a Reliance Industries subsidiary after the US $1.2 billion investment in Jio Platforms announced earlier this year. Seems the investment agian started flowing for the retail divison of Mukesh Ambani, after Jio investment took a pause of taking further investment.

Reliance Retail Limited, a subsidiary of RRVL, operates India’s fastest growing and most profitable retail business serving close to 640 million footfalls across its ~12,000 stores nationwide. Reliance Retail’s vision is to galvanize the Indian retail sector through an inclusive strategy that empowers millions of farmers and micro, small and medium enterprises. Working closely with global and domestic companies as a preferred partner, it aims to deliver immense benefits to Indian society, while protecting and generating employment for millions of Indians.

Reliance Retail, through its New Commerce strategy, has started a transformational digitalization of small and unorganized merchants and is committed to expanding the network numbering over 20 million businesses, giving them access to technology tools and efficient supply chain infrastructure that deliver superior value to their customers.

Mukesh Ambani, Chairman and Managing Director of Reliance Industries, said: “I am happy to welcome Mubadala as a valued investor in Reliance Retail Ventures. We value the partnership with a knowledge-rich organization like Mubadala and acknowledge their confidence in our mission to strengthen the core of India’s retail sector – the millions of small retailers, merchants and shopkeepers – through the power of technology. Mubadala’s investment and guidance will be an invaluable support in this journey.”

Khaldoon Al Mubarak, Managing Director and Group CEO, Mubadala Investment Company, said: "We are pleased to deepen our relationship with Reliance Industries through this investment in Reliance Retail Ventures. Their vision is the inclusive transformation of India’s consumer economy through the power of digitization, creating opportunities and market access for millions of small businesses across the country, and we are committed to supporting the company’s continuing development."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 counsels.

Lastly, a question arises on how the investors money are going to start return, Experst says, it is the most toughest journey for the both Jio and the retail division,since the existing players are not able to show profitability growth.