Tag: Retail Sector

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Finance Process & Business Expansion

Reliance Retail Asset Monetisation Picks Up Pace As Private Equity Firm KKR Announces Rs 55.5 Billion Investment

Reliance Market. (Photo Credit: Facebook)
Reliance Market. (Photo Credit: Facebook)

New Delhi, September 24: The retail asset monetization is picking up pace as private equity firm KKR announced a Rs 55.5 billion ($ 0.75 billion) investment in Reliance Retail. The equity firm announced the investment for a 1.28 percent stake implying a pre-money equity value of $57 billion.  This marks the second investment by KKR in a subsidiary of Reliance Industries, following a Rs 11,367 crore investment in Jio Platforms announced earlier this year. Bada Business ‘Retail Ka Mahakumbh’ 2020: Dr Vivek Bindra to Share Business Expansion Strategies on September 27; Click Here to Register.

On Wednesday, Reliance Industries Limited (RIL) and Reliance Retail Ventures Limited (RRVL) announced that global investment firm KKR will invest Rs 5,550 crore into RRVL. The RRVL is a subsidiary of Reliance Industries. This investment values Reliance Retail at a pre-money equity value of Rs 4.21 lakh crore. KKR’s investment will translate into a 1.28 per cent equity stake in RRVL on a fully diluted basis.

A report by Morgan Stanley stated that the valuation is in line with the last transaction that was announced with Silverlake and compares to its retail base case valuation of $45 billion. The report said. “At these valuations, it would add 6 per cent to Morgan Stanley’s base case NAV for RIL. KKR earlier invested $1.51 billion for 2.3 per cent of Reliance Digital platforms. RIL has sold a 3 per cent stake in RIL retail till date for $1.75 billion”.

Reliance Retail Limited, a subsidiary of RRVL, operates India’s largest, fastest growing and most profitable retail business serving close to 640 million footfalls across its 12,000 stores nationwide. Adding further, the report said the firm sees capital allocation, execution and de-gearing as key to the next leg of stock outperformance. “With industry consolidation pickingup pace in telecom, retail,and global refining, we expect RIL to emerge stronger post-Covid-19 and margins to surprise as pricing power rises,” it added.

 

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E-Commerce Finance

Essential Commodities to Fuel Revival of Retail Sector in India As Consumer Expenditure Remains Focused on Essentials, Says Report

Retail Sector (Photo Credits: Pexels)

A recent study has revealed that the demand for essential commodities is likely to drive the revival of the retail sector in India. According to a report by Anarock Retail and the Retailers Association of India (RAI) titled ‘Indian Retail – Certainty Despite Headwinds’, the average bill value for essentials has gone up 1.5 times after lifting of lockdown — from Rs 650 per basket in early March to more than Rs 900 per basket presently.

“Amidst the pandemic-induced slowdown, essential goods will fuel Indian retail industry’s growth in the coming quarters as consumer expenditure continues to remain focused on essentials, particularly food and grocery,” said a joint statement by Anarock and the RAI.

Anuj Kejriwal, MD & CEO of Anarock Retail, was quoted by IANS saying that COVID-19 will work as a catalyst for the growth of organised retail and e-commerce in India. “Online spending is on a marked rise with online shoppers projected to increase from 15 per cent in 2019 to 50 per cent of the total online population by 2026”, Kejriwal added. The CEO of Anarock Retail further added saying that other new retail industry trends, omni-channel retailing is evolving rapidly with brands collaborating actively to enhance their reach and many are using malls or in-mall stores as urban warehouses to ensure a faster delivery to customers.

The report further adds that organised retail and e-commerce are on an upswing. Giving details of the revival of several retail sectors, the report added that food and grocery, followed by apparel, fast moving consumer durables (FMCD) and electronics, furniture and home furnishings and quick service restaurants (QSR) will see a “v-shaped” recovery within the next two to three quarters. Meanwhile, several other segments including beauty, wellness and personal care and home essentials may take 4-6 quarters to recover fully, the report said.

Citing IBEF data, the report adds that the share of Indian organised retail will double to 18 percent in 2021, from 9 percent in 2017. Similarly, the e-commerce is expected to more than double to 7 per cent from the previous 3 per cent in the same period.

Kumar Rajagopalan, CEO, Retailers Association of India (RAI) was quoted in the report saying that Omni-channel was gaining importance before the pandemic and the pandemic has enhanced the importance of retailers having an omni-channel strategy.