Reliance Future-proofs retail arm to woo investors

The oil-to-telecoms group controlled by India’s richest man, Mukesh Ambani, announced late on Saturday that it will acquire Future Group’s retail and wholesale business as well as its logistics and warehousing operations.

The acquisition of Future Group’s 2,000 retail stores and Big Bazaar grocery chain will help Reliance, which sells everything from groceries to electronics through 11,000-plus stores, to broaden its extensive reach across the country.

But with Ambani set to sell stakes in Reliance Retail, the Future-Reliance deal makes it an even more attractive proposition for investors in a market that Boston Consulting Group expects to grow to $1.3 trillion by 2025.

“With this deal, Reliance’s dominance in the Indian market increases further and the valuation that Reliance Retail will now command will be even more,” said Arvind Singhal, chairman of retail consultancy Technopak Advisors.

Reliance, which has raised a little more than $20 billion from global investors including Facebook Inc by selling stakes in its Jio Platforms digital business, has said it aims to attract investors in Reliance Retail over the next few quarters.

“We’ve received strong interest from strategic and financial investors in Reliance Retail,” Ambani told shareholders at the company’s annual general meeting in July.

The acquisition will also help Reliance to extend its lead over its competitors, Singhal added.

Mumbai-based Reliance is well known for its ability to win over customers with financial muscle and its breadth of offerings.