Mukesh Am­bani’s re­tail unit val­ued at $34bn

Muscat Daily - - BUSINESS -

Mumbai, In­dia - A stock swap of­fer to help share­hold­ers of bil­lion­aire Mukesh Am­bani’s un­listed re­tail busi­ness mon­e­tise their in­vest­ment has val­ued the unit at US$34bn.

Share own­ers in Re­liance Re­tail Ltd can ex­change four shares for one of its listed par­ent Re­liance In­dus­tries Ltd, ac­cord­ing to a so-called scheme of ar­range­ment posted on the group’s web­site. With Re­liance’s mar­ket cap­i­tal­i­sa­tion at R9.6tn (US$135bn), the share swap val­ues the sub­sidiary at R2.4tn, ac­cord­ing to Bloomberg’s cal­cu­la­tion.

Be­sides help­ing Re­liance Re­tail em­ploy­ees mon­e­tise illiq­uid stock op­tions, the share swap also gives the first in­di­ca­tion of the unit’s val­u­a­tion at a time when Am­bani, Asia’s rich­est man, is scout­ing for in­vestors in the re­tail unit. He has promised to slash the group’s net debt to zero by March 2021 after an in­vest­ment spree of US$76bn in the past five years, bulk of it on its mas­sively dis­rup­tive tele­com car­rier.

The val­u­a­tion set by Re­liance ex­ceeds that of Tesco Plc, the UK’s big­gest su­per­mar­ket chain, which is val­ued at US$32bn. It’s also dou­ble that of Av­enue Su­per­marts Ltd, which runs In­dia’s big­gest su­per­mar­ket chain.

The de­rived val­u­a­tion is al­most 14 per cent lower than an­a­lyst es­ti­mates, BloombergQ­uint re­ported on Thurs­day. A

Am­bani had told share­hold­ers in Au­gust that plans are afoot to find in­vestors in the re­tail and tele­com units. “We will in­duct lead­ing global part­ners in these busi­nesses in the next few quar­ters, and move to­ward list­ing of both these com­pa­nies within the next five years,” he said.

For the year to March, Re­liance’s or­gan­ised re­tail rev­enue jumped 89 per cent to R1.3tn in the year. The earn­ings be­fore in­ter­est and taxes jumped 169 per cent to R55.5bn, ac­cord­ing to a com­pany state­ment which did not spec­ify a net in­come for the busi­ness.

Re­liance Re­tail, with 10,901 stores across the coun­try, runs In­dia’s largest chain of neigh­bour­hood su­per­mar­ket stores and con­sumer elec­tron­ics stores be­sides be­ing the top whole­sale sup­plier to na­tion’s army of small shop­keep­ers.

Mukesh Am­bani

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