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Reliance said it will contact Jio platform supporters to invest in the retail sector

Two sources with direct knowledge of the matter said that India’s Reliance Group has reached out to investors about potential buyers of its digital business.

The Petroleum Telecom Group is seeking to attract more investors to join Reliance Retail as the business is rapidly expanding online to attract Wal-Mart’s Flipkart and Amazon’s Indian branch.

Earlier this year, Reliance, controlled by Mukesh Ambani, the richest man in Asia, sold nearly 33% of its Jio Platforms digital business. It has acquired more than 33% of its shares from Facebook, Alphabet’s Google, KKR and Silver. 20 billion US dollars (about 147.20 billion rupees) in revenue. lake.

A source told Reuters that Mumbai-based Reliance Bank has invited some investors to participate in the retail business from the transaction. Although “it is understood that not everyone will participate,” it declined to be named.

The source did not specify which companies Reliance has contacted.

A third source said that Saudi Arabia’s Public Investment Fund (PIF) and Abu Dhabi National Fund Mubadala Investment Corporation (both supporters of Jio Platforms) are also weighing potential investments.

The source said: “These funds have established a strategic relationship with Reliance, not just a transaction.”

PIF and Mubadala declined to comment.

Reliance Retail has nearly 12,000 stores and sells everything from groceries to iPhones. Last month, it acquired the retail division of rival Future Group.

This week, it announced an investment of US$1 billion (about Rs 7,341 crore) from the US private equity firm Silver Lake.

“We have developed a strong interest in Reliance Retail from strategic and financial investors,” Ambani told shareholders at the company’s annual meeting in July.

Amazon talks

Bloomberg News quoted an unnamed person familiar with the matter as saying that Reliance is preparing to sell approximately 40% of its retail unit to Amazon, valued at approximately US$20 billion (approximately 147.02 billion rupees).

The Bloomberg report stated that Amazon has already held negotiations on investing in Reliance Retail and expressed its intention to negotiate a potential transaction, but has not yet made any decision.

Reuters was unable to independently verify whether Amazon and Reliance are in the new discussion.

Last year, Reuters reported that Amazon has been considering an offer to acquire up to 26% of Reliance Retail. Earlier this year, The Economic Times reported that Amazon was in discussions to buy a 9.9% stake in Reliance Retail.

Amazon did not respond to Reuters’ request for comment.

Reliance said it did not comment on speculation and rumors, adding that it “is constantly evaluating opportunities.”

Stock price surge

Reliance’s stock rose by 8.5% on Thursday, making it the first Indian listed company with a market value of over US$200 billion (approximately Rs 1,469,950 crore).

Ambani, the world’s fifth richest man, has successfully established the customer’s largest Indian telecommunications network within four years, and is now turning his empire to the retail industry, hoping to dominate as India’s huge consumer market matures. status.

For Reliance, the deal with Amazon may leverage the e-commerce giant’s global experience in technology, supply chain, and logistics, as the company aims to digitally connect moms and popular stores across India through its Jio telecom network .

For Amazon, its stake in Reliance Retail gives it access to the Jio telecom platform and its huge retail footprint in India. Because of the close family ties of Ambani, it can also add more firepower to Amazon’s local lobbying activities.

According to reports, the discussion took place at a time when Amazon faced stricter regulatory review and antitrust cases in India. Brick-and-mortar retailers accused Amazon of using unfair business practices to operate its online marketplace in India, which Amazon denied.

© Thomson Reuters 2020

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