Reliance Retail Secures Additional $598 Million Investment from ADIA

A subsidiary of the Abu Dhabi Investment Authority (ADIA) has invested a substantial amount of ₹4,966.80 crore in Reliance Retail Ventures Ltd (RRVL). This development is part of Reliance Industries' ongoing efforts to secure $3.5 billion in investments. RRVL has been actively drawing interest from notable investors, including private equity firm KKR & Co and the Qatar Investment Authority (QIA). As per the reports, RRVL was in talks with existing investors, including sovereign wealth funds from Singapore, Abu Dhabi, and Saudi Arabia, for a combined investment totaling approximately $1.5 billion.

ADIA investment translates to an equity stake of 0.59% in RRVL on a fully diluted basis. This infusion of capital has positioned RRVL with a pre-money equity value of ₹8.381 lakh crore, making it one of India's top four companies by equity value.

Strategic Investments

RRVL has been actively divesting its equity to strategic investors, including Qatar Investment Authority, global investment firm KKR, and now the Abu Dhabi Investment Authority. Remember, ADIA had previously invested ₹5,512.5 crore in RRVL in October 2020 and acquired a 1.18 % stake. Collectively, these strategic investments have injected an impressive sum of ₹15,314 crore into Reliance Retail Ventures.

Reliance Retail's Dominance

Reliance Retail Ventures, along with its subsidiaries and associates, operates the largest, fastest-growing, and most profitable retail business in India. Their integrated omni-channel network spans over 18,500 stores and digital commerce platforms, catering to various sectors, including grocery, consumer electronics, fashion & lifestyle, and pharmaceuticals. Impressively, they serve a staggering 267 million loyal customers. 

Quotes from Executives

Isha Mukesh Ambani, the Executive Director of RRVL, expressed satisfaction in deepening their relationship with ADIA. She highlighted ADIA's extensive experience in global value creation, emphasizing the potential benefits of RRVL's vision and the transformation of the Indian retail sector.

Hamad Shahwan Aldhaheri, the Executive Director of the Private Equities Department at ADIA, noted that this investment aligns with their strategy of supporting companies that are driving transformation in their respective markets.

Reliance Industries Q1 FY 2023-24 Results

For the first quarter of the fiscal year 2023-24, RIL declared a net profit of ₹16,011 crore, which is a 10.8% decrease from the previous year, revenue also dipped slightly to ₹231,132 crore. However, when we look closer, we see that its operational performance remained strong. Earnings before interest, taxes, depreciation, and amortization (EBITDA)  increased slightly to ₹38,093 crore.

The main reason for the overall performance dip was the challenge in their Oil-to-Chemicals (O2C) sector. On the flip side, their retail and telecom divisions showed impressive growth.

Reliance Retail, a key part of RIL, declared outstanding results. Its net profit went up by 18.8% to ₹2,448 crore, with an increase in gross revenue from operations, reaching ₹69,962 crore, with a notable growth in EBITDA to ₹5,151 Crore.

Reliance Industries (RIL) shares have remained stable in the last six months, experiencing only a 1% decrease. Looking back over the past year, there has been a slight negative return of 4%. However, when we take a broader perspective, RIL has doubled investors' money over the past five years, delivering an impressive return of 106% during that period.

In the same time period, the Nifty index has performed quite well. Over the last six months, it has shown a strong 10% gain, providing investors with a 13% return in the past year. Looking back over the last five years, the Nifty has experienced remarkable growth, surging by 86%.