Reliance Industries spreads its grasp by acquiring 2,000 of Future Group’s retail stores and Bazaar grocery chain. Future group’s huge chain of 2,000 outlets will now assist the 11,000 of Reliance Industry’s stores.
Owned by India’s “father of modern retailing,” Kishore Biyani’s Future Group is home to supermarket chain Big Bazaar, Upmarket food stores FoodHall and bargain clothing chain Brand factory.
Benefit to Reliance Industries
With Mr Mukesh Ambani set to sell stakes in reliance retail, the future-reliance deal makes it an, even more, significant proposition for buyers in this market. Boston Consulting Group estimates that this market will grow to $1.3 by 2025.
This deal will solidify RIL’s place as the biggest organised retailer in India and further diversify its earnings. Reliance has already raised a huge fund, somewhere around $20 Billion or more from international buyers together. Names like Facebook and Google are involved in this deal as well.
Ambani has lured these digital tech giants through promoting stakes in its Jio Platform Digital Enterprise. Reliance has already covered more than 6,700 towns in India with its 11,000 plus outlets.
Moody’s (a bond credit rating business) said despite a price tag of around USD 3.3 billion, the cost of the acquisition remains small relative to RIL’s total assets of around USD 155 billion and consolidated EBITDA of USD 12.8 billion for the fiscal ended March 31, 2020.
Impact on the stock market
Due to RIL’s deal organisations like Avenue Supermarts (who run widespread grocery chain Dmart), fell as much as 5.4 per cent, whereas, Aditya Birla style and retail closed 2.6 per cent down and V Mart misplaced 4 per cent.
Mr Mukesh Ambani at the company’s annual general meeting told their stakeholders that “we’ve received strong interest from strategic and financial investors in reliance retail.”
Reliance also launched JioMart, an e-commerce ventures which offers free express delivery from neighbourhood stores. JoiMart delivers groceries, apparel and electronic in more than 200 cities of India. This venture is said to run out competitions like Amazon and Flipkart out of India.
Facebook buys a 9.99% stake in Reliance Jio for Rs. 43,574 crores, an all-cash deal. This will help the oil-to-telecom conglomerate reduce the debt and strengthen the company’s social media presence.
Investors of Reliance Industries
Through a total of 14 deals with the biggest global firms Reliance Industries has sold nearly 33% stake in Jio platforms for Rs. 1.51 lakh crores since April 2020.
Throughout this whole analysis of Reliance Industries and Future group, we have talked about Reliance’s Jio and their investors. Facebook and Google are among the top investors. The Reliance-Google announcement came just days after Google’s CEO Mr Sundar Pichai said his company would invest $10 billion in India over the period of next 5 to 7 years through equity deals and tie-ups.
Vista Equity Partners with its investment of 11, 367 crores for a 2.32% equity take in the company becomes one of the top investors of Jio. With this Vista becomes third-largest stakeholder of Jio Platforms, it comes after the parent company Reliance Industries Limited (86.54% stake) and Facebook (9.99% stake).
Reliance Retail has got another push with the company announcing that Silver Lake will invest Rs 7,500 crore in RIL’s arm. The deal values Reliance Retail at Rs 4.21 lakh crore. Silver Lake’s investment will translate into a 1.75% equity stake in Reliance Retail Ventures Ltd on a fully diluted basis.
Through all these huge investments and great expansions what we can surely say is soon Reliance Industries might become the biggest global tech and retail giant.
Do read our other analysis also.