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Mukesh Ambani’s Reliance lands another billion-dollar check from Silver Lake

JioMart, Reliance’s ambitious e-commerce unit, is a joint venture between Reliance Retail and Jio Platforms.

Reliance Industries, India’s largest company by market capitalization, on Wednesday said Silicon Valley-based VC firm Silver Lake will invest USD 1 billion in its retail arm, Reliance Retail.

This deal that values Reliance Retail at a pre-money equity value of  USD 57.2 billion gives Silver Lake a 1.75% equity stake in the retail firm. This is Silver Lake’s second billion-dollar investment in the oil-to-telecom conglomerate. Earlier this year, it invested a total of  USD 1.35 billion in Jio Platforms, Reliance’s ten-month-old digital arm for about a 2% stake.

It is to be noted that JioMart, Reliance’s ambitious e-commerce unit, is a joint venture between Reliance Retail and Jio Platforms. And with its investment in both the entities, Silver Lake hopes to be a part of Reliance’s new commerce play.

“The success of JioMart in such a short time span, especially while India, along with the rest of the world, battles the COVID-19 pandemic, is truly unprecedented, and the most exciting growth phase has just begun,” Egon Durban, co-CEO and managing partner of Silver Lake, said in a statement.

“Reliance’s new commerce strategy could become the disruptor of this decade. We are thrilled to have been invited to partner with Reliance in their mission for Indian retail,” he added.

Meanwhile, KKR, which has also invested USD 1.5 billion in Jio Platforms for a 2.32% stake, is in advanced talks to invest at least USD 1 billion in Reliance Retail, a Bloomberg report, citing sources, said today.

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Mukesh Ambani, Asia’s richest person and chairman and managing director, Reliance Industries, rolled out JioMart in 200 cities across the country in May, taking on e-tail giants Amazon India and Walmart-owned-Flipkart.

Ambani’s big idea is to create a layer of online commerce on top of the digital layer he has created with Jio Platforms and integrate with its offline chain of pan-India retail stores. While Jio Platforms boasts of nearly 400 million online subscribers, Reliance Retail clocks close to 640 million footfalls annually in 12,000 stores spread across the country. For the year ended March 31, 2020, Reliance Retail reported a net profit of USD 726.4 million on the back of a consolidated turnover of USD 21.7 billion.

Reliance Retail, which runs popular chains like Reliance Fresh and Reliance Digital, has over 40 subsidiaries. Late last month, it acquired the retail and wholesale business as well as the logistics and warehousing business of the Indian conglomerate, Future Group for USD 3.35 billion.

“Reliance Retail’s vision is to galvanize the Indian retail sector through an inclusive strategy serving millions of customers by empowering millions of farmers and micro, small, and medium enterprises (MSMEs),” the company said in a statement. With its ‘New Commerce’ strategy, the Mumbai-headquartered company said, it has started a transformational digitalization of small and unorganized merchants.

Reliance Retail is expanding the network to over 20 million of these merchants, and offering them technology tools and efficient supply chain infrastructure to cater to their own customers, the company added. This is in line with the company’s vision to accelerate the partnership with kiranas/merchants, vendors, and the farmer ecosystem.

“I am delighted to extend our relationship with Silver Lake to our transformational efforts of building an inclusive partnership with millions of small merchants while providing value to Indian consumers across the country in the Indian retail sector,” Ambani said in a statement.

“We believe technology will be the key to bringing the much-needed transformation in this sector so that various constituents of the retail ecosystem can collaborate to build inclusive growth platforms,” he added.

Silver Lake, which manages USD 60 billion in combined assets, led a USD 500 million round in Indian edtech decacorn Byju’s earlier this week. The two-decade-old VC firm is the backer of some of the global tech giants like Dell Technologies, Twitter, Airbnb, Alibaba, and Alphabet’s Verily and Waymo units, among others.