Reliance Retail Buys Urban Ladder
|Mukesh Ambani, Chairman, Reliance Retail.
Photo credit: UK in India, licensed under CC BY-NC-ND 2.0
Indian retail giant Reliance Retail has purchased a majority 96% stake in Urban Ladder, an Indian furniture and decor retailer that was founded in 2012 and is backed by investors including Sequoia Capital, Steadview Capital, and businessman Ratan Tata. Reliance shelled out the equivalent of $24.4 million for the 96% stake and has the option to acquire the remaining 4% stake at will.
The acquisition doesn’t look quite well for Urban Ladder, given the company had raised up to $115 million in outside funding. Given a purchase price of $24.4 million, it’s apparent that some investors in Urban Ladder took sizeable losses from their bet on the company.
Now under the belt of Reliance Retail, the Indian retail giant plans to pump more money into Urban Ladder with a proposal to invest about $10 million more into the company from now through 2023. Urban Ladder’s acquisition marks a similar deal to when Reliance Retail paid $83.2 million to acquire a 60% stake in Indian online pharmacy service Netmeds in August.
Reliance Retail, which is the largest retailer in India in terms of revenue, is keen on expanding particularly in the e-commerce sector in the midst of increasing competition from other companies such as Amazon and Flipkart.
To fund its expansion, Reliance Retail has taken to outside funding from foreign investors such as American private equity firms KKR, General Atlantic, and Silver Lake as well as foreign sovereign wealth funds such as Singapore’s GIC and the Abu Dhabi Investment Authority.
As recently as September, private equity firms General Atlantic and Silver Lake reached respective deals to invest about $500 million and $1 billion for minor stakes in Reliance Retail. The firms now hold stakes of 0.84% and 1.75% in Reliance Retail respectively.
In the midst of its expansion, Reliance Industries, the Indian conglomerate, has continued to maintain control of its large retail arm. Armed with billions of dollars in new funding, it’s embarked on a business enlargement plan that centers on digitization and e-commerce for what’s majorly a brick-and-mortar operation.