RIL to sell minority stake in retail business to Walmart

Reliance Industries (RIL) plans to sell a minority stake in its retail business to Walmart. This as RIL's retail arm Reliance Retail Ventures (RRVL) inked a deal with Kishore Biyani-promoted Future Group for acquiring its retail and wholesale business and the logistics and warehousing business as going concerns on a slump sale basis for a lumpsum total consideration of Rs 24,713 crore. The acquisition would help Reliance Retail’s online segment to build a deep discounting strategy for JioMart, the e-commerce venture that competes with Amazon and Flipkart.

Interestingly, Bengaluru-headquartered Flipkart, which was acquired by Walmart for $16 billion in 2018, said its wholesale unit will acquire parent Walmart’s loss-ridden cash-and-carry business in India. Reliance, which recently launched JioMart in 200 cities, now averages 250,000 orders a day within weeks.

In a string of deals since April, RIL has sold a total of over 33 per cent stake in its Jio Platforms unit and raised Rs 1,52,056 crore from marquee investors and tech majors such as Google and Facebook. The deal with Future Group, adds substantially to the scale of business of Reliance Retail, which is already India’s largest retailer.

According to CLSA, RIL-Future Group deal further cements Reliance’s position as India’s largest retailer by expanding its retail outlets by 15 per cent and retail footprint and warehousing area by over 80 per cent, and will also add 4.1 per cent to Reliance’s market share of organised retail and take it to 17.8 per cent.

Goldman Sachs believes that after doubling EBITDA over the last four years, RIL can double it again by FY25 as the consumer businesses – telecom and retail -- are on the cusp of a strong growth period.