India's Ambani and Amazon's Bezos could strike in a $20b deal

Mumbai: Indian billionaire Mukesh Ambani's Reliance Industries is offering to sell a roughly $20 billion stake in its retail business to Amazon.com Inc. Amazon has held discussions about investing in the conglomerate's Reliance Retail Ventures Ltd. unit and has expressed interest in negotiating a potential transaction.

Mumbai-based Reliance Industries is willing to sell as much as a 40 per cent stake in the subsidiary to Amazon. A deal, if successful, would not only create a retail behemoth in India but will also turn Jeff Bezos and Asia's richest man from rivals into allies in one of the fastest-growing consumer markets in the world. At $20 billion, the deal would be the biggest ever in India as well as for Amazon, according to data compiled by Bloomberg.

Shares of Reliance Industries have extended gains and touched an all-time high after the story. The Indian rupee rose as much as 0.5 per cent to 73.1588 per dollar on expectations of more capital inflows.

In India, where a lot of people still shop in tiny street-corner stores, the deal could be Amazon's way of acknowledging that it needs a locally-entrenched partner with a strong on-the-ground presence. For Amazon, Reliance would provide a brick-and-mortar component to its ambitions in a country where online purchasing still accounts for a minuscule share of an estimated $1 trillion retail market.

A deal with Amazon would give further credence to Ambani's ambitions to create an e-commerce giant for India akin to China's Alibaba Group Holding Ltd. Reliance Retail already lured about $1 billion from Silver Lake Partners, while US private equity firm KKR & Co. is in advanced talks to invest at least $1 billion, and L Catterton is also considering investing.

The investment in Ambani's retail ventures comes after he raised $20 billion selling stakes in his technology venture - Jio Platforms Ltd. - to investors including Facebook Inc. and Google. The billionaire appears to be seeking to repeat that fundraising strategy with his retail business.

Reliance Retail - a unit of the energy-to-telecommunications conglomerate Reliance Industries - runs supermarkets, India's largest consumer electronics chain store, a cash and carry wholesaler, fast-fashion outlets and an online grocery store called JioMart. It reported 1.63 trillion rupees ($22 billion) in revenue in the year through March 2020. The unit operates almost 12,000 stores in nearly 7,000 towns.