Qatar’s sovereign wealth fund has agreed to buy a 1% stake in India’s massive Reliance Retail Ventures Ltd (RRVL) chain for US$1 billion – a valuation that has boosted the value of existing sovereign investor stakes by more than 60% since they bought into the firm in late 2020.
The Qatar Investment Authority (QIA) joins Abu Dhabi (ADIA and Mubadala), Saudi (Public Investment Fund (PIF)), and Singapore (GIC) peers as well as private equity giants KKR and General Atlantic, which together plunged more than US$6 billion into RRVL in October 2020. No other single business has drawn together such an array of sovereign investors.
Today, the business – established by Indian tycoon Mukesh Ambani – has 18,500 stores nationwide and operates a range of e-commerce platforms. RRVL’s valuation following the QIA investment is greater than the US$92-96 billion reported by Reuters as speculation grows over an IPO of the unit. RRVL’s business covers consumer goods stores and links neighborhood stores for online deliveries of groceries, clothing, and electronic goods through its JioMart platform.
Ambani’s daughter Isha Ambani, who leads RRVL, said, “We look forward to benefitting from QIA’s global experience and strong track record of value creation as we further develop Reliance Retail Ventures Limited into a world class institution, driving transformation of the Indian retail sector. The investment by QIA is a strong endorsement of a positive outlook towards Indian economy and Reliance’s retail business model, strategy and execution capabilities.”
QIA’s involvement in the Ambani empire with a big-ticket acquisition marks a big step forward in its India strategy, aligning with Gulf peers and departing from its focus on venture capital funding rounds. It also suggests the fund is looking for more mature assets as they prepare for listing.
To date, QIA’s direct investments in India have largely focused on venture capital, particularly in online retail, including food delivery startups Swiggy and Rebel Foods as well as e-commerce platform Flipkart, and news aggregator and video platform provider VerSe Innovation. It also bought a 25% stake in Adani Electricity Mumbai Ltd (AEML), the power transmission and distribution asset of the business empire of Indian billionaire Gautam Adani, for INR32 billion (US$450 million) in December 2019.
RIL is a conglomerate under the leadership of another of India’s powerful billionaires, Mukesh Ambani. Its subsidiaries have attracted around US$11 billion in capital from SWFs and public pension funds from across the world, but mostly from the Gulf region. State-owned investors (SOIs) have focused on two areas of RIL’s business: retail and telecom.
Ambani has managed to attract a total of US$12.5 billion from sovereign investors for the different parts of Reliance Group. The group has won market confidence in recent months with market capitalization at US$207 billion with QIA’s backing of RRVL helping to support sentiment.
RIL gained support from ADIA, Mubadala and PIF, which together bought a 5.4% stake in its telecoms’ unit Jio. Like RRVL, Jio is seeking to disrupt the market by aggressively under-cutting established rivals with a low-cost new fiber-to-the-home broadband service plus additional offers. Sovereign investment in telecoms infrastructure is supporting Jio’s relentless growth.
ADIA and PIF invested US$506 million each to take a 51% stake in the Digital Fibre Infrastructure Trust (InvIT), and Canadian public pension fund BCI and GIC teamed up with Brookfield to acquire a telecoms tower company from RIL for US$3.4 billion. With Jio the portfolio’s anchor tenant under a 30-year Master Services Agreement, the partners are looking to increase the number of towers by 30% to match the telecom operator’s growing subscriber base.
