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UAE and Saudi funds plan to invest $1bn in Reliance unit

Adia Reliance REUTERS/Niharika Kulkarni
The investment by the UAE’s sovereign wealth fund will translate into an equity stake of 0.59% in Reliance Retail

India’s Reliance Retail is in talks with existing investors including the sovereign wealth funds of Singapore, Abu Dhabi and Saudi Arabia for combined new investments of around $1.5 billion, three sources with direct knowledge of the plan said.

Reliance Retail is India’s largest retailer and is led by Asia’s richest person Mukesh Ambani. The talks with investors are part of an internal target to raise $3.5 billion which the company wants to close by the end of September, Reuters has reported.

Of that, Qatar Investment Authority (QIA) last month announced a $1 billion investment and KKR & Co this week $250 million.

Singapore’s GIC, the Abu Dhabi Investment Authority (ADIA) and Saudi Arabia’s Public Investment Fund (PIF) are looking to invest at least $500 million each in Reliance Retail at a valuation of $100 billion, one of the sources told Reuters.

GIC, ADIA declined to comment, while PIF did not respond to Reuters requests for comment. Reliance said: “We do not comment on media speculation and rumours.”

A second source said some of the three investors could end up putting in less than $500 million and talks were also ongoing with at least one or two further investors for the fund raising.

“All the three investors have evaluated the company quite seriously,” said the first of the three sources, all of whom declined to be named as the discussions are private.

The final investments or funding plans could still change.

GIC, PIF and ADIA are among the world’s biggest investment funds and together they own a 4.4 percent stake in the Indian retailer.

Reliance Industries, the retail arm’s parent, also has plans to invest in the ongoing fund raising round of $3.5 billion, two of the sources said.

A fourth source briefed on the dealmaking said the 2020 fund raising agreements had a clause that allowed existing investors to increase their stakes, and those investment funds were showing keen interest.

Reliance sold a 10.09 percent stake in its retail unit in 2020, valuing it at INR4.68 trillion ($56.4 billion). At that time, GIC and ADIA invested $664 million each, while PIF pumped in $1.15 billion, based on current exchange rates.

Ambani’s Indian retail empire has more than 18,000 stores, with operations ranging from groceries to electronics. It includes foreign partnerships with brands such as Marks and Spencer and competes with Amazon and Walmart’s Flipkart in one of the world’s biggest markets.

When ADIA invested in Reliance Retail in 2020, it said it was part of its strategy of targeting market leading businesses in Asia linked to the region’s consumption-driven growth.

Last month Ambani said in a speech that “several marquee global strategic and financial investors have shown strong interest” in his company, but gave no names. In 2019, the billionaire said his group planned to list the retail business in five years.

Reliance Retail reported a consolidated net profit of INR91.81 billion ($1.11 billion) for the financial year that ended in March 2023, on revenue of INR2.6 trillion. It has also forayed into the consumer goods business, which will compete with the likes of Coca-Cola and Unilever.