Reliance Retail Ventures Ltd, the retail arm of Mukesh Ambani‘s Reliance Industries Ltd, has announced its intention to raise Rs3,048 crore through an infrastructure investment trust (InvIT) focused on its warehousing and logistics infrastructure assets. The move is part of Reliance’s strategy to monetize its warehousing and logistics assets, a move first reported in April this year. The company has established the Intelligent Supply Chain Infrastructure Trust for this purpose.
Structure of the InvIT
As per the draft document filed with the Securities and Exchange Board of India (SEBI), Reliance Retail will retain a minimum of 25% units of the trust, while the remaining units will be offered to incoming investors. The InvIT is set to acquire warehouse space totaling 12.77 million square feet and related logistics infrastructure at an estimated consideration of Rs4,261 crore. The portfolio will consist of 64 warehouses located across 34 cities in India, including major warehousing markets like Delhi NCR, Mumbai, Bengaluru, Chennai, Kolkata, Ahmedabad, Pune, and Hyderabad.
Allocation of Funds
Out of the Rs3,048 crore expected to be raised through the InvIT, around Rs100 crore will be allocated for acquiring equity shares of a special purpose vehicle (SPV) established to hold the warehousing assets. The bulk of the funds, Rs2,928 crore, will be used to provide a loan to the SPV for the acquisition of the warehousing and associated logistics assets. Additionally, the trust has entered into a lending agreement with Sikka Ports and Terminals Ltd, a Reliance group entity, to secure a rupee term loan of Rs2,122 crore for the same purpose.
The Significance and Expansion of Reliance Retail
Reliance Retail Ventures, with a consolidated revenue of Rs2,31,366 crore and a net profit of Rs9,181 crore for the financial year ended March 31, 2023, operates a vast retail network with 18,446 stores spread across 70.6 million square feet of retail space in India. The company’s retail business encompasses various sectors, including grocery, consumer electronics, pharmacy, fashion, and lifestyle. Some of its prominent brands include Reliance Fresh, Reliance Digital, Trends, and Ajio.com.
Reliance Retail is expected to engage with potential investors to raise funds through the proposed InvIT. This initiative is in line with Reliance Industries’ ongoing efforts to monetize its infrastructure assets. Notably, this will be the fourth InvIT launched by Reliance Industries, following similar funds focused on gas pipelines, Jio telecom towers, and the fiber optic cable network.
The launch of the InvIT for Reliance Retail’s warehousing and logistics infrastructure assets marks another strategic move by the conglomerate to unlock value from its extensive business portfolio. As the company navigates the process of raising funds through the InvIT, it reaffirms its commitment to enhancing its financial flexibility and capitalizing on opportunities within India’s rapidly growing retail and logistics sectors.
Disclaimer: The information provided here is for educational purposes only and should not be considered financial advice. Always conduct thorough research and consider consulting a financial professional before engaging in algorithmic trading.