Retail asset monetization is picking up pace as private equity firm KKR announced a Rs 55.5 billion ($ 0.75 billion) investment in Reliance Retail for a 1.28 percent stake implying a pre-money equity value of US$ 57 billion.
According to a report by Morgan Stanley, the valuation is in line with the last transaction valuation announced with Silverlake and compares to its retail base case valuation of US$ 45 billion.
“At these valuations, it would add 6 percent to Morgan Stanley’s base case NAV for RIL. KKR earlier invested US$ 1.51 billion for 2.3 percent of Reliance Digital platforms. RIL has sold a 3 percent stake in RIL retail till date for US$ 1.75 billion,” the report said.
“We see capital allocation, execution and de-gearing as key to the next leg of stock outperformance,” the report said.
“With industry consolidation picking up pace in telecom, retail, and global refining, we expect RIL to emerge stronger post-COVID-19 and margins to surprise as pricing power rises,” it added.
Reliance Industries Limited (RIL) and Reliance Retail Ventures Limited (RRVL) announced that global investment firm KKR will invest Rs 5,550 crore into RRVL, a subsidiary of Reliance Industries. This investment values Reliance Retail at a pre-money equity value of Rs 4.21 lakh crore. KKR’s investment will translate into a 1.28 percent equity stake in RRVL on a fully diluted basis.
This marks the second investment by KKR in a subsidiary of Reliance Industries, following a Rs 11,367 crore investment in Jio Platforms announced earlier this year.
Reliance Retail Limited, a subsidiary of RRVL, operates India’s largest, fastest growing and most profitable retail business serving close to 640 million footfalls across its 12,000 stores nationwide.