This article is written by Atif Ahmed who is pursuing a Diploma in M&A , Institution Finance & Investment Laws (PE & VC Transactions) from Lawsikho.
Table of Contents
Introduction
Have you heard of Netmeds, Fynd, Grab or Hamleys? Did you know all of these brands are now owned by Reliance Industries Limited (“RIL”)? These were not founded by RIL, but were recently acquired by RIL as part of its strategic investment.
RIL, which started in 1973 by Dhirubhai Ambani solely as a polyester business, later expanded into textile business, and is now one of the largest conglomerates in the world, having its product portfolio across almost every sector. The company has diversified into petroleum sector, chemical industry, mobile communications sector, food retail industry and apparel market.
In the past three years alone, RIL has made acquisitions worth USD 3 billion in order to boost its product offerings. According to Morgan Stanley Research report, out of the $3 billion invested for acquisitions across various verticals, RIL has put in $566 million in media and education sector, $194 million in retail sector, $1.2 billion in telecom and internet firms, $100 million in digital and $391 in the chemicals and energy space.
Having that said, let us now discuss 10 recent acquisitions made by RIL, their deal size and the benefits they hold for RIL.
Saavn
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INVESTMENT DETAILS |
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Year of Investment |
2018 |
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Type of Investment |
Strategic |
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Amount Invested |
USD 104 Million |
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Stake bought |
81.7% |
- What is Saavn?
RIL acquired music over-the-top (OTT) platform Saavn in 2018 and merged it with its JioMusic to form Jio Saavn.
Jio Saavn has over 200 employees and it operates out of five offices that are spread across US and India. It has offices in California, New York, Bangalore, Gurgaon, and has its headquarters based in Mumbai. It offers about 40 million tracks in 15 different languages and has over 900 label partnerships with the likes of Universal, Sony, T-Series, etc.
JioSaavn offers services in a freemium model which contains free basic services and paid premium services (such as ad free music). Under the free basic services, the revenue is earned through advertisements. And under the premium model, the revenue is earned through the paid subscriptions.
- Deal Nature and Size
RIL acquired Saavn for USD 104 million and after a few months, on March 23, 2018, RIL announced a strategic merger of its digital music service JioMusic with newly acquired Saavn. RIL acquired a 75-80 % stake in the merged entity, i.e. JioSaavn.
RIL claims that the combined entity (i.e. JioSaavn) is valued at over USD 1 billion, with JioMusic’s implied valuation at USD 670 million and Saavn with a valuation of USD 330 million.
- Purpose and Benefits
The acquisition and merger of Reliance’s JioMusic and Saavn has been made by RIIL to strengthen their foothold in the Indian music streaming market. The over-the-top (OTT) platforms, such as the music service apps, are dominating the market, and are set to expand furthermore in the coming time.
“The investment and combination of our music assets with Saavn underlines our commitment to further boost the digital ecosystem and provide unlimited digital entertainment services to consumers over a strong uninterrupted network”
-Mukesh Ambani
Embibe
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INVESTMENT DETAILS |
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Year of Investment |
2018 |
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Type of Investment |
Strategic |
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Amount Invested |
USD 180 Million |
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Stake bought |
72.69% |
- What is Embibe?
Embibe is an education platform that uses data analytics to deliver personalised learning outcomes for the students. It targets students across different levels of their schooling and career, for example students studying from kindergarten to 12th grade (K-12), students in colleges or other higher education, professions in their skill development, and other curriculum categories across India and abroad.
With the help of artificial intelligence (AI), Embibe is focussed on content intelligence and automation, recommending content on the basis of behaviour, preference and intelligence.
- Deal Nature and Size
On April 12, 2018, RIL executed a definitive agreement to acquire majority equity stake in Embibe by purchasing the shares from its existing investors, with a deal to invest USD 180 million in Embibe over a period of three years. It picked up a stake of 72.69% from the existing investors of Embibe on a fully diluted basis.
In April 2020, Embibe received a funding of INR 500 crore from RIL.
- Purpose and Benefits
It was a strategic investment by RIL, with an aim to build India’s largest artificial intelligence (AI) based learning platform.
With Embibe’s technology and RIL’s capital base, RIL aims to connect over 1.9 million schools and 58,000 universities across India. It believes that Embibe will help enable Reliance to realise its vision for the education sector, which is to build India’s largest artificial intelligence (AI) based learning platform.
Post the acquisition by RIL, the founder and CEO of Embibe, Aditi Avasthi has continued to lead the company as an independent entity.
Den Networks and Hathway Cable & Datacom
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INVESTMENT DETAILS |
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Year of Investment |
2018 |
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Type of Investment |
Strategic |
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Amount Invested |
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Stake bought |
|
- What is Den Networks and Hathway Cable and Datacom?
Hathway Cable is owned by the Raheja Group and DEN Networks is owned by Sameer Manchanda.
Hathway Cable enjoys over 52 % market share of the total MSO cable in India, with a subscriber base of 7.7 lakh. Further it has an ability to reach 5.5 million homes.
DEN Networks has a present subscriber base of approximately 106,000. However, it claims to have the ability to reach 9.7 lakh homes but currently has around 106,000 broadband subscribers.
- Deal Size and Nature
In October, 2018, RIL through its subsidiaries acquired a majority stake in Den Networks and Hathway Cable and Datacom. It acquired a 66% stake in Den Networks with a primary investment of INR 2,045 crores and a 51.3 % stake in Hathway Cable and Datacom with an initial investment of INR 2,940 crores.
- Purpose and Benefits
After shaking the telecom sector, Reliance Jio seems well on its way to take on another sector, i.e. the cable, digital content and broadcasting market.
The investments made by RIL were majorly aimed to boost the rollout of Jio GigaFiber which is competing with the likes of Bharti Airtel and BSNL in the country. Reliance Jio also has the wireless infrastructure assets of Reliance Communications (RCom) to consolidate its telecom presence.
RIL is aiming to take Jio Fiber to more than 2 crore households in the country.
Fynd
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INVESTMENT DETAILS |
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Year of Investment |
2019 |
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Type of Investment |
Strategic |
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Amount Invested |
INR 295.25 Crore |
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Stake bought |
87.6% |
- What is Fynd?
It was founded in 2012, by Farooq Adam, by the name of Addsale, which was later renamed to Shopsense and finally Fynd. It works on an online to offline (O2O) model.
On fynd, customers across the country (India) can order branded products from different stores across the country. Fynd has more than 500 brands listed on its platform, including popular brands, such as Hamleys, Steve Madden, Diesel, Nike, Puma, etc.
- Deal Nature and Size
In 2019, RIL, through its subsidiary, i.e. Reliance Industrial Investments & Holdings, acquired 87.6% stake in Fynd for INR 2.95 billion (i.e. USD 42.33 million).
- Purpose and Benefits
It is a strategic investment by RIL, with an aim to build India’s largest e-commerce network.
RIL has entered into the e-commerce space with the help of Jio Mart and Reliance Retail. RIL has been investing in the entities that are going to help build India’s largest e-commerce network and compete more strongly with the likes of Amazon, Flipkart etc.
The investment would further help the RIL group’s digital and commerce initiatives.
Grab
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INVESTMENT DETAILS |
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Year of Investment |
2019 |
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Type of Investment |
Strategic |
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Amount Invested |
INR 106 Crore |
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Stake bought |
83% |
- What is Grab?
Grab was founded in 2013 by Jignesh Patel, Nishant Vora, and Pratish Sanghvi. It provides services such as on-demand, reverse deliveries, first mile, and last mile logistics.
Some of its huge clients include McDonalds, BigBasket, Myntra and Swiggy. It was backed by investors such as SIDBI Venture Capital Arm, SIDBI Venture Capital Limited (SVCL) Aramex, Zomato and Sixth Sense Ventures.
- Deal Size and Nature
In 2019, the subsidiary of Reliance Industries Limited, i.e. Reliance Industrial Investments and Holdings Limited (RIIHL) acquired 83% equity shares of Grab A Grub Services Private Limited (Grab) in a cash deal worth $14.9 Mn (INR 106 Cr).
- Purpose and Benefit
The investment in Grab will help support the RIL Group’s digital commerce initiatives and will strengthen its logistics network, and will help the company to cater to both business-to-business (B2B) and business-to-consumer (B2C) segments.
The strong e-commerce model of RIL would then help it to strong-arm its rivals, i.e. Amazon India and Flipkart in the country.
Haptik
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INVESTMENT DETAILS |
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Year of Investment |
2019 |
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Type of Investment |
Strategic |
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Amount Invested |
INR 700 Crore |
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Stake bought |
87% |
- What is Haptik?
Haptik was founded in 2013 by Aakrit Vaish and Swapan Rajdev. It is one of the world’s largest conversational artificial intelligence (AI) platforms that lets customers chat with their voice assistants to complete day-to-day tasks such as online shopping, travel bookings and food delivery, among others.
Haptik has worked with over 50 brands, including majors, such as Samsung, Coca-Cola, Future Retail, KFC, Tata Group, Oyo Rooms, Mahindra Group, etc. Haptik also expanded to the United States (US) in 2018 and the United Kingdom (UK) in 2019.
- Deal Size and Nature
In 2019, RIL, through its subsidiary Reliance Jio Digital Services Ltd (RJDSL) acquired 87% stake in Haptik Infotech Pvt. Ltd (Haptik) for INR 700 crore, on a fully diluted basis.
The remaining 13% stake would continue to be held by the founders and employees (through ESOP) of Haptik.
RIL paid INR 230 crore as the initial consideration for the transaction.
- Purpose and Benefits
The acquisition will help RIL’s Reliance Jio to leverage Haptik’s technology and capabilities in order to build India’s largest artificial intelligence (AI) assistant across chat, voice and vernacular languages. This will help take RIL’s Reliance Jio to the next level of success.
This will also help RIL compete with Google Assistant and Amazon Alexa, which has an advanced foothold in the artificial intelligence (AI) assistant technology.
Reverie
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INVESTMENT DETAILS |
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Year of Investment |
2019 |
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Type of Investment |
Strategic |
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Amount Invested |
INR 190 Crore |
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Stake bought |
83.3% |
- What is Reverie?
Reverie was founded by Arvind Pani in 2010. Reverie provides a voice suite (known as Gopal) in 12 Indian languages, including Hindi, Telugu, Tamil, Bengali, Marathi, Gujarati, Indian English, etc. which can be integrated with both chatbots and Interactive Voice Response (IVR) solutions which the companies can use to engage with their non-English speaking customers.
- Deal Size and Nature
In April 2019, Reliance Industrial Investments & Holdings (RIIHL), a wholly-owned subsidiary of RIL, acquired a majority stake in Reverie Language Technologies (Reverie) for INR 190 crore.
Reliance will hold 83.3 % equity capital in Reverie on a fully diluted basis. And RIL will further invest Rs 77 crore by March 2021.
Reverie Language Technologies will continue to operate independently.
- Purpose and Benefits
Reverie will work towards integration of its Indic language localization services with RIL’s digital consumer platforms. Reverie would work in collaboration with the Reliance ecosystem for integrating its services in the various existing digital consumer platforms of the RIL group.
Tesseract
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INVESTMENT DETAILS |
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Year of Investment |
2019 |
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Type of Investment |
Strategic |
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Amount Invested |
INR 10.12 Crore |
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Stake bought |
92.7% |
What is Tesseract?
Tesseract is a Mumbai-based virtual reality (VR) startup founded in 2015 by Kshitij Marwah. Tesseract has launched three hardware and two software products in the Mixed Reality (MR), Augmented Reality (AR), and Virtual Reality (VR) spaces. The founder claims to hold seven patents across different countries.
- Deal Size and Nature
In August, 2019, Reliance acquired an equity stake of 80-85% in Tesseract that would be valued anywhere between INR 150 Crore and INR 500 Crore.
- Purpose and Benefits
Post-acquisition, Tesseract has developed the Jio HoloBoard as a native mixed reality headset for JioFiber users. Holoboard would be the first made-in-India Augmented Reality (AR) headset which works with smartphones.
Reliance Jio plans to make the headset available for purchase in the market at an extremely affordable price .
Hamleys
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INVESTMENT DETAILS |
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Year of Investment |
2019 |
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Type of Investment |
Strategic |
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Amount Invested |
GBP 67.96 Million (approx INR 620 Crore) |
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Stake bought |
100% |
- What is Hamleys?
Hamleys is a London based brand, which was founded by William Hamley in the year 1760. Today, Hamleys is one of the world’s oldest retailers of toys. Currently, Hamleys has 167 stores spread across 18 different countries.
- Deal Size and Nature
Reliance Brands, a subsidiary of RIL, has completed the acquisition of Hamleys for GBP 67.96 million (about Rs 620 crore) for an all-cash consideration.
It completed the acquisition of Hamleys Global Holdings (HGHL) through a special purpose vehicle (SPV) set up in the United Kingdom (UK) for this purpose.
- Purpose and Benefits
This acquisition is again meant to improve RIL’s foothold in the retail market. It will help Reliance Brands to become a dominant player in the global toy retail industry.
Netmeds
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INVESTMENT DETAILS |
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Year of Investment |
2020 |
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Type of Investment |
Strategic |
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Amount Invested |
INR 620 Crore |
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Stake bought |
60% |
What is Netmeds?
Netmeds is amongst the top online pharmacies in India. The company deals in a wide range of healthcare products, such as high-quality prescription medicines, over-the-counter pharmaceuticals, general health care products, Ayurvedic, and homeopathic medicines. It has a good logistic network, having its delivery facilities across India that helps the company to deliver medicines to its customers at a faster pace.
Netmeds is a subsidiary of Dadha & Company, one of India’s most trusted pharmacy brands with over 100 years of experience in dispensing quality medicines. Pradeep Dadha founded the company in 2010 and it is headquartered at Chennai, Tamil Nadu.
- Deal Size and Nature
On August 19, 2020, Reliance Retail Ventures, a subsidiary of RIL, acquired a majority stake in Netmeds’s parent company Vitalic, for approximately INR 620 Crore. The deal gave the RIL group a 60% stake in the Chennai-based company.
In addition to this, RIL said that it will also get 100% direct equity ownership in the subsidiaries of Netmeds, which are Tresara Health, Netmeds Marketplace and Dadha Pharma Distribution.
- Purpose and Benefits
The Online pharmacy market was already on a rise, and Covid19 pandemic has given it a much desired push. Besides offering steep discounts, it offers door-to-door delivery of essential medicines, subscription to medicines, e-consultancy etc.
RIL had acquired the stake in Netmeds just days after US e-commerce giant Amazon.com Inc launched an online pharmacy service in India.
Acquisition of Netmeds would enable Reliance Retail to provide affordable and extensive health care products and services, and also broaden its digital commerce portfolio to include essential day-to-day needs of the consumers.
Conclusion
With a total net worth of about USD 80.6 billion, Mukesh Ambani, the chairman and MD of RIL, has already been ranked as the fourth richest person in the world, according to the Bloomberg Billionaires Index. Mukesh Ambani has ambitious plans for RIL, which can be witnessed from the deals that he has recently been inking. RIL has already expanded into petroleum, chemical industry, mobile communications, food retail industry and apparel market sectors. These deals will further help RIL in technologically advancing and logistically getting better in each sector it has its presence, with special emphasis on the digital sector. On top of it, Reliance Retail has entered into an agreement with Kishore Biyani’s Future Group, to purchase its retail, wholesale, logistics and warehousing units. The deal will give further boost to RIL’s retail and e-commerce initiatives, helping it compete more strongly with the likes of Amazon and Flipkart amongst others.
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