Another big move by Mukesh Ambani as Isha Ambani-led Reliance Retail may restructure business before...

Before listing Reliance Retail Ventures (RRVL) on the stock market, Mukesh Ambani might consider restructuring the company. Over the past three years, the Isha Ambani-led Reliance Retail Ventures has invested more than Rs 1 lakh crore in acquisitions and joint ventures to expand and become the largest retail company in India. However, this rapid expansion has also burdened the company with debt, forcing it to raise equity and consolidate its operations.

To raise new capital for its retail holding company, RRVL, Ambani approached foreign investors in 2023. The company raised Rs 17,667 crore from investors, including Rs 2,500 crore invested by Reliance Industries at a price of approximately Rs 1,200 per share. This helped the company reduce its debt-to-equity ratio at a standalone level.

The previous equity funding valued the retail venture at $100 billion, which is roughly half of the current market capitalization of its parent company, Reliance Industries. After this round of funding, Reliance Industries’ stake in the retail holding company decreased to 83.56%.

The fundraising began in November 2020 when RRVL raised Rs 47,265 crore amid the COVID-19 pandemic. So far, the company has raised Rs 65,292 crore from investors, most of which has been allocated to its main subsidiary, Reliance Retail.

The rapid expansion over the past three years has put pressure on the company’s cash flow, as working capital requirements have increased and the entry into new consumer sectors has consumed cash.