Abu Dhabi sovereign-wealth fund invests nearly $600M in Reliance Retail at $100B valuation

Abu Dhabi Investment Authority is investing $597 million in Reliance Retail, valuing the largest Indian retail chain at a whopping $100 billion. The investment follows KKR and Qatar Investment Authority together investing $1.7 billion in the Indian firm, which is part of Mukesh Ambani’s Reliance Industries.

Abu Dhabi sovereign-wealth fund’s investment will fetch it a 0.59% stake in Reliance Retail.

“We are pleased to further deepen our relationship with ADIA with their continued support as an investor in Reliance Retail Ventures Limited,” said Ambani in a prepared statement. “Their long-standing experience of over decades of value creation globally will further benefit us in implementing our vision and driving transformation of the Indian retail sector. ADIA’s investment in RRVL is a further testament to their belief in the Indian economy and our business fundamentals, strategy and execution capabilities.”

The investment comes at a time when Reliance Retail is expanding into new categories, including low-cost fast-fashion, and is also considering a public listing. The company, which also recently partnered with Shein to help the Chinese e-commerce firm reenter India, has purchased and integrated a number of other businesses.

Reliance Retail has also made a push into e-commerce in recent years, including maintaining a tie-up with Meta’s WhatsApp to sell grocery through the instant messaging app. Though Walmart-owned Flipkart and Amazon India currently lead the local e-commerce market, analysts believe that Reliance will eventually outpace both firms.

AllianceBernstein estimated in a note earlier this year that Reliance’s robust retail network, sweeping mobile network and digital ecosystem and a “home field advantage” in a notoriously challenging regulatory landscape will help the Indian conglomerate beat online rivals.

“The medium-term investment case for RIL is driven by: (1) strong cash flows and ability to invest in growth businesses and (2) potential value-unlocking in the medium term: We believe the operating earnings downgrade cycle for RIL 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,” wrote JPMorgan analysts in a note last month.

Reliance Industries, which owns the majority of Reliance Retail Ventures and is the largest company by market cap in India, has aggressively expanded into a wide range of sectors, including telecom and on-demand video streaming, in the past decade as it diversifies from its reliance on oil. Isha, the daughter of Mukesh Ambani, leads the retail business.

“Reliance Retail has demonstrated strong growth and adaptability in a market that is evolving at an unprecedented pace,” said Hamad Shahwan Aldhaheri, executive director of the Private Equities Department at ADIA, in a statement.

“This investment aligns with our strategy of supporting our portfolio companies that are transforming their respective end-markets. We are pleased to partner with the Reliance Group, and increase our exposure to India’s dynamic and fast-growing consumer sector.”