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Business deals

Ambani's Reliance retail arm to raise $1bn from Silver Lake

Indian conglomerate fills war chest after $20bn Jio fundraising

Reliance Industries, India's most valuable conglomerate, is focused on expanding its consumer business, such as telecom and retail, as drivers of growth.   © Reuters

MUMBAI -- India's biggest conglomerate, Reliance Industries, on Wednesday announced that its retail arm, Reliance Retail Ventures, will receive a 75 billion rupee ($1 billion) investment from U.S. tech fund Silver Lake.

The investment, which values Reliance Retail at 4.21 trillion rupees, will give Silver Lake a 1.75% stake in the company. It is the second investment by Silver Lake in a Reliance unit. The private equity fund earlier this year invested $1.35 billion in Jio Platforms, the group's telecom and digital services company.

"I am delighted to extend our relationship with Silver Lake to our transformational efforts of building an inclusive partnership with millions of small merchants, while providing value to Indian consumers across the country in the Indian retail sector," said Mukesh Ambani, the conglomerate's chairman and managing director, who is India's richest man.

The latest funding comes just 10 days after Reliance announced plans to buy Indian retail pioneer Future Group's main units for 247 billion rupees through Reliance Retail Ventures. With its fattened coffers, Reliance is expected to launch an assault on rivals such as Amazon.com and Walmart-owned Flipkart.

It also follows Reliance's huge fundraising drive this year for Jio, which brought in $20 billion from investors such as Facebook, Intel and Google. The conglomerate intends to divest minority stakes in the digital and retail businesses, and hold initial public offerings for each within five years.

"Reliance's New Commerce strategy could become the disrupter of this decade. We are thrilled to have been invited to partner with Reliance in their mission for Indian retail," said Egon Durban, co-CEO and managing partner at Silver Lake.

Reliance Retail reported a net profit of 54.5 billion rupees on sales of 1.63 trillion rupees in the fiscal year ended in March.

The retail arm launched JioMart, an e-commerce venture, earlier this year. The initiative aims to connect mom-and-pop stores, called kiranas, with consumers. JioMart is active in more than 200 cities in India and is an important part of Reliance's plans to reach new sales channels.

Reliance recently disclosed details of its plan to hive off its oil-to-chemical business into a separate entity to draw new investors into the business.

"The nature of risk and returns involved in the [oil-to-chemical] business are distinct from those of the other businesses of Reliance and ... attracts a distinct set of investors and strategic partners," the company said in a statement.

Reliance has been trying to strengthen its consumer businesses, such as telecom and retail. Ambani believes consumer businesses will fuel the next phase of growth for India's most valuable group by market capitalization.

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