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Reliance gears toward its second round of acquisition spree

Jio Platforms has raised over USD 20 billion in funding from 13 global investors in the last few months.

Reliance Industries, India’s largest company by market capitalization, is looking to acquire a string of startups to strengthen its e-commerce play.

The Mumbai-headquartered company, owned by the world’s fourth-richest person Mukesh Ambani, is in talks to acquire milk delivery platform Milkbasket and online furniture brand Urban Ladder, a report by local media Times of India (TOI) said, citing people familiar with the matter. Reliance is also said to be in discussions to take e-pharmacy startup Netmeds and lingerie retailer Zivame under its wings.

According to the TOI report the Urban Ladder deal is pegged at USD 30 million that includes capital infusion and earn-out for the management team. The negotiations are at the advance stage but nothing has been finalized yet. The eight-year-old startup is said to have received interest from other buyers as well. Last month, the Bengaluru-based company was reportedly in talks with Flipkart and fashion brand FabIndia for a sell-out deal at a valuation of INR 200 crore (USD 26.7 million).

Meanwhile, Gurugram-based Milkbasket had been in acquisition talks with e-grocer Bigbasket and e-tailer Amazon India previously, but none of that materialized as the company sought higher valuation.

“They (Milkbasket) are negotiating for a better valuation than previous suitors and are thus in discussions with RIL. The recent capital infusion of USD 5 million has bought them extra time,” one of the sources told TOI.

Startup

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The startup claims to be serving over 100,000 households across Gurugram, Noida, Dwarka, Ghaziabad, Hyderabad, and Bengaluru.

Urban Ladder and Milkbasket aren’t the only startups in which Reliance has shown its interest. In May, a local media reported that Reliance is in advanced discussions to acquire a majority stake in Netmeds in a deal worth USD 130-150 million that would include capital infusion in the online pharmacy. Late last month, Reliance Brands (a part of Reliance Retail) reportedly bought the stake of Unilazer Ventures in Zivame and is now seeking to take full control of the firm.

All these acquisitions will help in the rapid expansion of Ambani’s ambitious e-commerce venture, JioMart.

“If this was always in the works, the Billions from FB+Google+PEs now makes total sense,” Brij Bhasin, general partner at Asia-focused early-stage venture capital firm Rebright Partners said in a recent tweet. “JIO is building a third front in the E-commerce war, and it will go after Amazon using its own playbook – encircle and consolidate.”

JioMart is crucial for Reliance’s transformation from a traditional offline retailer into an omnichannel retailer with an expansive digital presence. Rolled out in 200 cities in May, JioMart began with selling fresh fruits, vegetables, dairy, staples, and personal and healthcare products. Within a few weeks, the company said JioMart reached 250,000 orders a day. In July the company said, in addition to grocery, it will expand JioMart to cover electronics, fashion, pharmaceutical, and healthcare in the days ahead.

Moreover, JioMart, which is a joint venture between the conglomerate’s retail arm Reliance Retail and digital arm Jio Platforms, is instrumental for Reliance’s ambition to build its digital empire in India. To fuel its vision, Jio Platforms has raised over USD 20 billion in funding from 13 global investors including Facebook, Google, General Atlantic, KKR, and Public Investment Fund in the last few months.

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With billions of dollars in its kitty and a potential list of companies which it wants to acquire or invest, the oil-to retail conglomerate is now ready to set the ball rolling in e-commerce space.

This is not the first time Reliance is writing checks for companies to fuel its inorganic growth.  According to a December 2019 Morgan Stanley Research report, Reliance has poured in USD 3 billion in acquisitions across verticals between 2017 and 2019. The company has put in  USD 1.2 billion in telecom and internet firms, USD 566 million in media and education, USD 194 million in retail, USD 391 in the chemicals and energy space, and USD 100 million in digital.

It has already made a wide range of investments in the startup ecosystem, which it has been leveraging to boost is product offerings. At present, Jio Platforms has over 20 startup partners working on cutting-edge technologies including 4G and 5G technologies, cloud computing, devices and operating systems, big data analytics, machine learning and artificial intelligence, and virtual and mixed reality.

From music-streaming startup Saavn and ed-tech firm Embibe to chatbot Haptik and local language platform Reverie, Reliance has strategically spread its tentacle across digital services space.