- In preliminary talks, the American e-commerce giant Amazon is acquiring a 9.9 percent stake in Reliance Retail given the growth of the business.
Amazon will join its global competitors Google and Facebook in funding one of Indian Billionaire Mukesh Ambani ‘s companies.
In preliminary talks, the American e-commerce giant Amazon is acquiring a 9.9 percent stake in Reliance Retail, local TV news channel ET Now announced Thursday afternoon, citing unnamed sources.
Reliance Retail, founded in 2006, is India’s biggest retail chain. As of early this year, it serves more than 3.5 million customers per week across its nearly 10,000 physical stores in more than 6,500 towns and cities throughout the country.
The confirmed talks between Amazon and Reliance Retail come days after Ambani, who is the richest man in India, said many companies had expressed interest in supporting the retail chain. Ambani’s other company, Reliance Jio Platforms, has raised more than $20 billion since April this year by selling 33 percent stake to over a dozen investors including Facebook, Google, Silver Lake, and General Atlantic.
At the Annual General Meeting of Reliance Industries earlier this month, Ambani said the firm would “induce global partners and investors in Reliance Retail in the next few quarters.”
The new company of Reliance Industries JioMart is rapidly becoming a formidable competitor for Amazon, which has spent more than $6.5 billion in its business in India, and for Walmart’s Flipkart in the last months. In April, Facebook announced it had agreed with Reliance Industries to discuss ways to partner on serving 60 million Indian mom and pop shops.
Both Amazon and Reliance Retail were also engaged in a fight to acquire the majority stake in Future Retail, India’s second-largest retail chain, according to local media reports. Last year, Amazon spent more than $100 million in Future Coupons, a collective company owned by Future Retail, to gain a 49 percent stake.
The investment, which gave Amazon a 3.58 percent stake in Future Retail, also gave it the right of first refusal to buy further stake in Future Retail both directly and through affiliates, according to the terms revealed in a legal filing by the two firms.
The two companies have also signed a “long-term partnership arrangement” in which Future Retail sells certain products online via the marketplace of Amazon India.
Shares of Reliance Industries Ltd. traded 1.81 percent up in Wednesday’s trade Around 106,462 shares changed hands on the counter.
The scrip opened at Rs 1983.8 and touched an intraday high and low of Rs 2001.75 and Rs 1960.0, respectively, in the session so far. Shares of the company of Reliance Industries Ltd. quoted a 52-week high of Rs 1978.5 and a 52-week low of Rs 867.11.
It will be interesting to see Amazon joining rivals Facebook and Google into investing in the same conglomerate.