Qatar Investment Authority mulls buying about 1% stake in India’s Reliance Retail for $1bn

Qatar Investment Authority (QIA), the country’s sovereign wealth fund, has been quite aggressive in recent times in making new investments around the world.

The QIA, which is working to diversify Qatar’s global assets and steer it away from over dependency on hydrocarbons, is in talks to buy a minority stake in the retail arm of Indian conglomerate Reliance Industries, led by billionaire Mukesh Ambani.

The Financial Times first reported that QIA is considering a $1bn investment in Reliance Retail Ventures, for a stake of about 1%, valuing the business at around $100bn. It cited three people with knowledge about the discussions.

The Qatar Investment Authority is in talks to buy a stake in Indian billionaire Mukesh Ambani’s Reliance Retail Ventures https://t.co/J4PDECf3lU pic.twitter.com/2ED6x0SC6v

— Financial Times (@FinancialTimes) July 26, 2023

Talks have been ongoing between the two entities for months but were stuck on valuations. While the QIA board is yet to clear the proposal, reports stated that a positive decision is expected early next month.

The report sent shares of Reliance Industries up by 2.1%, its biggest percentage jump in over a week.

This is almost a 60% premium to the last round of investments, which was raised three years ago. Saudi Arabia’s Public Investment Fund had invested $1.3bn for a 2.04% stake in 2020, in a deal that valued the company then at about $62.4bn.

Other shareholders of the round that saw a 10% dilution included New York-based private equity firm KKR, TPG, General Atlantic and two Abu Dhabi sovereign investment funds. QIA did not invest in that round.

Reliance Retail, fully owned by Reliance Retail Ventures, was valued at $92 to $96bn by two global consultants — Ernst & Young Merchant Banking Services and BDO Valuation Advisory —a move that could signal an eventual initial public offering (IPO).

Reliance Retail, headed by Mukesh Ambani’s daughter Isha, has core retail businesses that include digital and brick-and-mortar stores.

In recent years, it has partnered with a slew of global brands like Burberry, Pret A Manger and Tiffany to launch and expand its presence in India.

At a $100bn valuation, Reliance Retail will outpace global peers including Tesco, Carrefour, Uniqlo and JD.com. In India, Reliance Retail is already the largest player and is more than three times bigger than the largest listed retail chain Avenue Supermarts, which owns Dmart.

QIA has in recent times become a proactive investor in India competing with peers from Abu Dhabi and Saudi Arabia. It has backed James Murdoch’s new media and education venture in India — Bodhi Tree — besides backing start-ups like Byju’s, Rebel Foods and Swiggy apart from a large real estate portfolio.

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