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MarketScreener Homepage  >  Equities  >  NSE India Stock Exchange  >  Reliance Industries Ltd    RELIANCE   INE002A01018

RELIANCE INDUSTRIES LTD

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Reliance approaches digital unit backers to invest in retail arm - sources

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09/10/2020 | 02:46am EDT

* Digital unit backers include Facebook, Google, KKR

* Saudi Arabian, Abu Dhabi funds weighing investment - source

* Reliance has also approached Amazon - Bloomberg (Recasts, updates to add sources, Reliance comment on fundraising)

NEW DELHI/DUBAI, Sept 10 (Reuters) - India's Reliance Industries Ltd has approached investors in its digital business about potentially buying stakes in its retail arm, two sources with direct knowledge of the matter said on Thursday.

The oil-to-telecoms conglomerate is looking to attract more investors to Reliance Retail as the business expands rapidly online to take on the likes of Walmart Inc's Flipkart and Amazon.com Inc's Indian arm.

Earlier this year, Reliance, controlled by Asia's richest man Mukesh Ambani, sold nearly 33% of its Jio Platforms digital business, netting more than $20 billion from companies including Facebook, Alphabet's Google, KKR & Co and Silver Lake Partners.

Mumbai-based Reliance has approached some investors from that deal to take stakes in the retail business, although "it is understood not all will participate", one of the sources told Reuters, asking not to be named as talks are private.

The sources did not specifically name which companies Reliance had approached.

Saudi Arabia's Public Investment Fund (PIF) and Abu Dhabi state fund Mubadala Investment Company - both backers of Jio Platforms - are also weighing a potential investment, a third source said.

"It is a strategic relationship that these funds have with Reliance which goes beyond one deal," said this source.

PIF and Mubadala declined to comment.

Reliance Retail, which has nearly 12,000 stores and sells everything from groceries to iPhones, acquired rival Future Group's retail arm last month.

This week, it announced a $1 billion investment from U.S. private equity firm Silver Lake Partners.

"We've received strong interest from strategic and financial investors in Reliance Retail," Ambani told shareholders at the company's annual meeting in July.

AMAZON TALKS

Bloomberg News cited on Thursday an unidentified person with knowledge of the matter as saying Reliance was offering to sell a roughly 40% stake in its retail arm, worth about $20 billion, to Amazon.

Amazon has held talks about investing in Reliance Retail and expressed an interest in negotiating potential deals, but has made no decision, Bloomberg's report said.

Reuters could not independently verify whether Amazon and Reliance were in fresh discussions.

Last year, Reuters reported that Amazon had been mulling a proposal to purchase an up to a 26% stake in Reliance Retail. Earlier this year, the Economic Times reported that Amazon was in talks to buy a 9.9% stake in Reliance Retail.

Amazon did not respond to a Reuters request for comment.

Reliance said it did not comment on speculation and rumours, adding it "evaluates various opportunities on an ongoing basis."

SHARES SURGE

Shares in Reliance rose as much as 8.5% on Thursday, making it the first listed Indian firm to achieve a market capitalization of more than $200 billion.

Ambani, the world's fifth richest man, is shifting his empire's focus towards retail after successfully building India's largest telecom network by customers in four years, hoping to take a dominant position as India's huge consumer market comes of age.

For Reliance, a deal with Amazon could potentially leverage the e-commerce giant's global experience in technology, supply chain and logistics, as it aims to connect mom-and-pop stores across India digitally through its Jio telecoms network.

For Amazon, a stake in Reliance Retail could give it access to the Jio telecoms platform and its vast retail footprint across India. It could also add more firepower to Amazon's local lobbying efforts, as the Ambani family is well-connected.

The reported discussions come at a time when Amazon has been facing tighter regulatory scrutiny and anti-trust cases in India, with brick-and-mortar retailers alleging it uses unfair business practices to operate its online marketplace in the country, an allegation Amazon denies. (Additional reporting by Sachin Ravikumar in Bengaluru and Saeed Azhar in Dubai; Editing by Anil D'Silva, Patrick Graham and Mark Potter)

Stocks mentioned in the article
ChangeLast1st jan.
ALPHABET INC. 0.96% 1422.86 Delayed Quote.6.23%
AMAZON.COM, INC. 0.66% 3019.79 Delayed Quote.63.42%
FACEBOOK 0.20% 249.53 Delayed Quote.21.57%
KKR & CO. INC. -3.05% 33.06 Delayed Quote.13.34%
LONDON BRENT OIL 0.31% 41.9 Delayed Quote.-36.73%
RELIANCE INDUSTRIES LTD -2.22% 2181.2 Delayed Quote.48.74%
SILVER -0.55% 23.0931 Delayed Quote.37.06%
WALMART INC. 0.52% 136.7 Delayed Quote.15.03%
WTI 0.00% 40.309 Delayed Quote.-35.93%
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Financials
Sales 2021 5 306 B 71 797 M 71 797 M
Net income 2021 421 B 5 698 M 5 698 M
Net Debt 2021 1 020 B 13 799 M 13 799 M
P/E ratio 2021 33,7x
Yield 2021 0,30%
Capitalization 13 849 B 187 B 187 B
EV / Sales 2021 2,80x
EV / Sales 2022 2,13x
Nbr of Employees 195 618
Free-Float 50,9%
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Mean consensus OUTPERFORM
Number of Analysts 28
Average target price 2 187,68 INR
Last Close Price 2 181,20 INR
Spread / Highest target 14,6%
Spread / Average Target 0,30%
Spread / Lowest Target -39,5%
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Managers
NameTitle
Mukesh Dhirubhai Ambani Chairman & Managing Director
Srikanth Venkatachari Joint Chief Financial Officer
Alok Agarwal Joint Chief Financial Officer
Nikhil Rasiklal Meswani Executive Director
Hital Rasiklal Meswani Executive Director
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