Qatar sovereign fund may invest $1 billion in Reliance Retail; RIL shares jump 2%

economictimes.indiatimes.com:

Reliance Industries (RIL) on Wednesday jumped 2% amid a report that billionaire Mukesh Ambani may rope in Qatar Investment Authority (QIA) to pick up a minority stake in Reliance Retail. Qatar’s sovereign wealth fund is in talks to buy stake in Reliance Retail and is said to be considering a $1 billionn investment giving it a stake of about 1% and valuing the business at around $100 billion, the Financial Times reported today. Following the news, RIL shares rallied 2% to hit day's high at Rs 2,533.45 on BSE.

Back in 2020, Saudi Arabia’s Public Investment Fund had invested $1.3 billion for a 2.04% stake in Reliance Retail. Other shareholders include KKR and two Abu Dhabi sovereign investment funds. Calculations done by global brokerage firm JPMorgan sees Reliance Retail’s enterprise value at $112 billion and implied equity value at $102 billion.

UBS has valued it at $110 billion, Bernstein at $111 billion while domestic brokerage JM Financial's estimate is at $105 billion. In 2020, RIL had sold 10.52% stake in RRVL to various PE investors when the company was valued at around Rs 4.2-4.3 lakh crore. Earlier this month, Reliance had announced that it will cancel shares held by non-promoters in RRL (Reliance Retail) and pay shareholders Rs 1,362 per share.

The move will lead to extinguishment of 0.4% equity in the company. RIL owns 85% of RRVL, which in turn owns more than 99% of Reliance Retail. The consideration of Rs 1,362 per share is at a 54-60% premium to valuation obtained from 2 valuers, which UBS said sets a floor price to future value unlocking and should bring confidence to retail business' value in the SoTP-based target price of RIL.