RIL gains 1% as General Atlantic to invest Rs 3,675 cr in Reliance Retail

Shares of Reliance Industries (RIL) advanced 1 per cent to Rs 2,268 on the BSE in the early morning trade on Wednesday after General Atlantic, a leading global growth equity firm, said it will invest Rs 3,675 crore in Reliance Retail Ventures Limited (RRVL) for 0.84 per cent equity stake.

The stock of RIL was trading higher for the fourth straight day and has gained 4 per cent during the period. It hit a record high of Rs 2,368.80 on September 16, 2020.

“General Atlantic’s investment will translate into a 0.84 per cent equity stake in RRVL. The deal values Reliance Retail at a pre-money equity value of Rs 4.285 trillion”, RIL said in a media release.

This marks the second investment by General Atlantic in a subsidiary of RIL, following a Rs 6,598.38 crore-investment in Jio Platforms announced earlier this year.

Last week, private equity (PE) firm KKR said it would invest Rs 5,550 crore in RIL’s subsidiary Reliance Retail for a 1.28 per cent stake. Earlier, US-based PE firm Silver Lake had announced that it would invest Rs 7,500 crore in the retail firm for a 1.75 per cent stake.

RRVL is a subsidiary of RIL and holding company of all the retail companies under the RIL Group. It reported a consolidated turnover of Rs 162,936 crore ($ 21.7 billion) and net profit of Rs 5,448 crore ($ 726.4 million) for the year ended March 31, 2020.

The stock of RIL has outperformed the Sensex over the past three months on the back of the company’s significant deleveraging record, and ability to get on-board new investors and partners in the Digital Services business, setting a new benchmark valuation.

“Long term, we continue to like RIL’s business and balance sheet, and believe all three of its core businesses – O2C, Retail and Digital Services – have become self-sustaining and cash-generating, with Retail and Digital Services on a high growth path,” analysts at HSBC Global Research said in a recent note.