Qatar sovereign wealth fund in talks for stake in Reliance Retail: report

Qatar’s sovereign wealth fund, the Qatar Investment Authority (QIA), is in talks to acquire a stake in Reliance Retail Ventures, the retail unit of billionaire Mukesh Ambani’s conglomerate.

A report in the Financial Times said QIA is exploring the possibility of acquiring a minority stake, with a potential investment of $1 billion, which would grant them a stake of about 1% in the retail business. The investment is likely to value Reliance Retail Ventures at an estimated $100 billion.

The deal has not been finalized yet, as people quoted in the FT report said Qatar’s $450 billion sovereign fund has yet to approve the potential investment.

Reliance Retail Ventures is a subsidiary of Ambani’s Reliance Industries and constitutes consumer businesses ranging from luxury fashion to grocery. Isha, Ambani’s younger daughter, oversees the retail business. 

The reported move comes in the wake of several high-value deals in Reliance’s retail business, including a $1.3 billion investment from Saudi Arabia’s Public Investment Fund. In 2020, the Saudi sovereign wealth fund acquired a 2.04% stake in Reliance Retail Ventures, valuing the company at about $62.4 billion at the time. Other key investors include New York-based private equity firm KKR and two Abu Dhabi sovereign investment funds.

Analysts have provided varying valuations for Reliance Retail Ventures. While AllianceBernstein valued the retail arm at $131 billion in May, other analysts such as Ambit Capital and JM Financial estimated it at $57 billion and $100 billion, respectively. According to JPMorgan, Reliance Retail’s enterprise value is estimated to be $112 billion, with an implied equity value of $102 billion.

In the June quarter, Reliance Retail posted a record-high revenue of $8.53 billion (₹69,948 crore), up 19.5% year-on-year (y-o-y). Profit grew 18.8% y-o-y to $300 million.

“Improved disclosures, combined with lower capex in Retail, should allow for better value discovery for the Retail business, and of RIL’s multiple moving parts, we still see retail as the most interesting. As the multiple acquisitions done in the past few quarters are integrated, we expect Rev/Ebitda growth to sustain at +20% y-o-y,” JPMorgan said in a recent report.