India’s Reliance Offers $20B Stake To Amazon

It’s been a September to remember so far for India’s Reliance Retail, as it has extended an offer to Amazon to own part of its rapidly expanding international empire.

The deal would give Amazon an automatic leadership position on the subcontinent as it continues to aggressively search for the kind of market share that would help it compete with India’s entrenched eCommerce players. Amazon only held one Prime Day so far this year, and it was in India on Aug. 6.

“I want to make a prediction for you,” said Amazon CEO Jeff Bezos when he visited India in mid-January. “I predict that the 21st century is going to be the Indian century. The dynamism, energy … everywhere I go here, people are interested in self-improvement, growth. This country has something special. This is going to be the Indian century.”

One of the drivers of Bezos’ claim has been Indian billionaire Mukesh Ambani’s Reliance Industries Ltd., which has been called “the Amazon of India.” After buying the Future Group retail chain and its 2,000 stores last week, reports surfaced that Ambani was negotiating with Walmart to sell a stake in his company. Now he’s offering to sell a roughly $20 billion stake in its retail business to Amazon.

According to Bloomberg, Amazon has held discussions about investing in the conglomerate’s Reliance Retail Ventures Ltd. unit. Mumbai-based Reliance Industries is willing to sell as much as a 40 percent stake.

“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,” said Bloomberg. “At $20 billion, the deal would be the biggest ever in India as well as for Amazon, according to data compiled by Bloomberg.”

For Ambani, the deal would also mark an aggressive period of buying other companies and then seeking further international investment. In addition to discussing selling a stake in his company to Walmart and now Amazon, he has been in talks with KKR about selling a $1 billion stake in Reliance, and has also been courting Middle Eastern investors. With Ambani’s strategy, it appears that he is assembling a truly global coalition of investors, to be followed by a global retail commerce brand.

“Interestingly, when Reliance Industries acquired the retail business of Future Group last month, the conglomerate had structured the deal in a way that Amazon doesn’t become its shareholder,” noted India’s ET Tech. “ Amazon owns a 49 percent stake in Future Coupons, which owns about a 10 percent stake in Future Retail, [which] operates more than 1,000 stores under Big Bazaar, Fbb, Foodhall and Easyday Club brands.”