Qatar Investment Authority injects Rs82.78bn ($1bn) into Reliance Retail Ventures, marking a significant move in Asia’s retail battleground.

This investment is seen as a strategic manoeuvre by Mukesh Ambani, Asia’s wealthiest individual, to rapidly expand his retail empire and take on global giants such as and Walmart.

In a statement released on Wednesday, the Mumbai-based conglomerate disclosed that the Qatar Investment Authority’s infusion equates to a 0.99% stake in Reliance Retail Ventures Ltd. when considering full dilution.

This investment values the company at an impressive $100bn.

Reliance retail’s ambitious plans

As part of Reliance’s ambitious expansion strategy, the company is also mulling a public listing for Reliance Retail. Simultaneously, it has initiated a share buyback program within the unit, allotting shares to employees as stock options.

Under the leadership of Mukesh Ambani’s daughter Isha, the subsidiary has embarked on a series of acquisitions, posing a formidable challenge to global competitors attempting to establish themselves in India’s fiercely competitive retail sector, predominantly dominated by local mom-and-pop stores.

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Isha Ambani hailed the Qatar Investment Authority’s participation as “a strong endorsement” of India’s thriving economy and Reliance’s retail enterprise.

This move is part of Qatar’s sovereign wealth fund’s continued investment in Indian conglomerates. Earlier this year, the Qatar Investment Authority increased its presence in the Indian market by acquiring a 2.7% stake in Gautam Adani’s green energy business following a short-seller attack on the billionaire’s empire in January.

Reliance retail’s financial performance

Notably, Reliance Retail secured over $6bn in investments three years ago, with contributions from sovereign wealth funds of Saudi Arabia, Singapore and the United Arab Emirates, alongside General Atlantic, KKR & Co and Silver Lake Partners.

In the quarter ending in June, the company reported a 34% surge in earnings before interest, taxes, depreciation and amortisation (EBITDA), reaching Rs51.5bn compared to the same period the previous year.

However, it’s worth mentioning that Reliance Retail contributes just over 10% to the conglomerate’s overall earnings. Currently, it consumes more than a third of the group’s capital expenditure, according to analysts at ICICI Securities.

They noted that Reliance’s retail revenue growth has not matched its substantial spending.

Despite this, Qatar Investment Authority CEO Mansoor Ebrahim Al-Mahmoud affirmed the firm’s commitment to supporting innovative, high-growth potential companies in India’s rapidly expanding retail market.

He expressed anticipation for Reliance Retail Ventures, with its robust vision and impressive growth trajectory, to become a valuable addition to the fund’s diverse portfolio of Indian investments.