After the Qatar Investment Authority, another sovereign fund from the Gulf region, the Abu Dhabi Investment Authority is planning to buy an additional stake of $600 million in Reliance Retail Limited, The Economic Times reported. The development is significant since fresh investments will be made at significantly higher valuations.
In October 2020, ADIA holds a 1.20 percent stake in Reliance Retail Ventures Limited, which it bought for Rs 5512.50 crore in October 2020. Reliance Retail raised Rs 47,265 billion in October 2020 by selling a 10.09 percent stake to investors such as Saudi PIF, Mubadala, GIC, Silverlake, TPG, and GA, the ET report said.
With a pre-money equity value of 8.361 trillion, RRVL ranked among the top four companies by market cap in India. So far, QIA's $1 billion investment has been the only fresh investment in the current round of fundraising, the report said.
How do analysts view RRVL?
The valuation of Reliance's retail business is about 60 percent higher than the last fundraising three years ago. In analysts' eyes, Reliance Retail is much more valuable, even after the added premium. In May, analysts at AllianceBernstein put Reliance Retail at $131 billion, the ET report said.
Besides, Reliance itself valued its retail business at $148 billion when it decided to buy out minority stakes and employee stock option holders who collectively owned 0.09 percent. The valuations were determined by two independent entities - Ernst & Young and BDO Valuation - who valued Reliance Retail at $93 billion and $97 billion respectively.
With a market value of $100 billion, Reliance Retail is the 11th largest retail sector globally, ahead of competitors such as JD.com, Target, Midea, and Lululemon. The ET report said Amazon, LVMH, Walmart, Home Depot, and Alibaba are among the top five in terms of market value.
In the year 2022-23, Reliance Retail posted a revenue of Rs 2,60,364 crore, a 30 percent year-on-year growth, with an EBITDA of Rs 17.928 crore. ET reported that the company had a net profit of 9.181 crore for the year to date, making it a net loss of Rs 9,181 crore.