Carlyle, SoftBank put on hold for Reliance Retail stake sale

Given the strong investor demand for Reliance Retail, Carlyle Group Inc and SoftBank Group Corp proposals to buy stake in billionaire Mukesh Ambani-led company have been put onto a waiting list

Reliance Retail's acquisition of Future Group's retail businesses has solidified its position in India's organised retail market and is turning out it be all the rage with global investors. Marquee names, including Carlyle Group Inc and SoftBank Group Corp, want a pie of the retail arm of Reliance Industries even at a tough time like this when businesses have been badly impacted by coronavirus-led lockdown.

Given the strong investor demand for Reliance Retail, Carlyle Group Inc and SoftBank Group Corp proposals to buy stake in billionaire Mukesh Ambani-led company have been put onto a waiting list, Bloomberg reported citing sources.

Recently, both these companies have expressed interest to buy a strategic minority stake in Reliance Retail Ventures Ltd. As per the report, oil-to-telecom conglomerate Reliance Industries has asked these companies to wait on the sideline as it is already in advanced talks with other financial investors.

Also Read: How big is Mukesh Ambani's Reliance Retail

US-based private equity Carlyle Group is reportedly looking to invest up to $2 billion in Reliance Industries' retail business. Japan's Softbank is also mulling an investment in Reliance Retail as Ambani looks to deleverage business by selling stakes.

Last week, American private equity firm Silver Lake announced an investment of Rs 7,500 crore ($1 billion) in Reliance Retail Ltd, a Reliance Industries Ltd subsidiary, for a 1.75 per cent equity stake on a fully diluted basis. As per reports, US-based PE investors KKR and Co., Mubadala Investment Co., and Abu Dhabi Investment Authority (ADIA) are also in talks to invest in the retail arm of Reliance Industries. 

Also read: BT Buzz: What next for Kishore Biyani after selling Future Retail to Mukesh Ambani's Reliance?

According to Fitch Ratings, the equity stake sale will further strengthen RIL's financial profile and competitive position beyond the proposed acquisition. The global research firm believes that the proposed acquisition of Future Group's retail business will fortify its retail footprint, especially in the grocery retail sub-segment.

Also read: Future Uncertain

Last month, RIL acquired the retail business of Kishore Biyani-led Future Group for total consideration of Rs 24,700 crore, including a cash payment of about Rs 5,000-6,000 crore and balance as liabilities which would be absorbed by RIL. The Future Group asset acquisition is subject to regulatory, shareholder, creditor and other customary approvals, which may take around six months to complete.

By Chitranjan Kumar