Reliance offers Amazon US$20 billion stake in retail arm

Reliance Offers Amazon $20 Billion Stake in Retail Arm: Report

On Thursday, shares of Reliance Industries Limited (RIL) rose over 8 percent to hit a new all-time high of Rs 2,344.95 after a Bloomberg report citing sources said that the company is offering to sell roughly a $20 billion stake in its retail business to Amazon.

Further, on Wednesday, a Bloomberg report said that KKR is in advanced talks to invest at least $1 billion in the retail business.

However, a source close to Reliance Retail said it was unlikely that Ambani would give such a large share to a single investor. Earlier this year, the Economic Times reported that Amazon was in talks to buy a 9.9% stake in Reliance Retail. The acquisition, according to Moody's, will strengthen the retail footprint of India's largest organised retailer. This is almost twice the market cap of India's second most valued firm Tata Consultancy Services (TCS), which is valued at $119 billion. RIL contributed 126 points to the Nifty rally of 171 points. Analysts say that nearly half of the gain in Nifty Index was contributed by RIL.

In a startling development, Reliance Retail has offered to sell their 35-40% stake to Amazon, for whooping $20 billion. This includes investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, ware-house, agriculture market produce infrastructure etc.

Reliance Retail also announced its acquisition of rival Future Group's retail arm in August, for $3.38 billion, and on Wednesday announced a $1 billion investment from United States private equity firm Silver Lake Partners, which took a 1.75% equity stake.

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Reliance had crossed Dollars 150 billion market capitalisation on June 19, 2020, meaning it has added around USD 60 billion in investor value in less than 60 market days.

"We would like to reiterate that as a policy, we do not comment on media speculation and rumours and we can not confirm or deny any transaction which may or may not be in the works".

"Our company evaluates various opportunities on an ongoing basis".

"Responding to an e-mail query, Amazon said: "...we do not comment on speculations of what we may or may not do in the future". "Reliance can benefit via an increase in its addressable user base for JioMart via access to existing 140 million active users of Amazon", said Credit Suisse. It could also add more firepower to Amazon's local lobbying efforts, as the Ambani family is well-connected. The deal would also trigger a three-way battle between Amazon-Reliance, Walmart-Flipkart and other players in the world's second most populous country where the Covid-19 pandemic has accelerated a shift in consumer behaviour from brick-and-mortar retail to e-commerce.

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