Reliance Retail, the subsidiary of Reliance Industries Limited (RIL), is buying Kishore Biyani's Future Group in a deal of Rs 24,713 crore. With this acquisition deal, Reliance Retail is all set to expand its retail business and compete with the e-commerce giant Amazon. While responding to the Interim order passed by the Emergency Arbitrator, Reliance Retail Ventures Limited (RRVL) said that it would acquire Future Group’s all assets and businesses as per the obligation of Indian law.
After this news, the price of Reliance Retail unlisted shares also increased. However, some investors also claim that this acquisition deal will significantly impact Reliance Retail Pre-IPO shares. In this blog, we will discuss this deal and the possible impact it can make on the unlisted shares of Reliance Retail.
Details Of The Acquisition Deal Between Reliance Retail & Future Group
Reliance Retail has been among the top bidders, along with Jeff Bezos's Amazon, for acquiring the Future Group. To expand its market share in the e-commerce industry. The company also announced that it will complete the acquisition process immediately.
In the official statement, Reliance Retail said, "RRVL has entered into the transaction process of acquisition of assets and business of Future Retail Limited under the legal advice, and the rights and obligations are enforceable under the Indian Law."
To understand the context of the deal, we have to dig a little deeper. Amazon won an interim order against Future Group and agreed to purchase 49% of the stakes. During the deal, the e-commerce giant mentioned its right to buy the flagship Future Retail business after 3-10 years.
However, Future Group intended to sell its retail, wholesale, logistics, and warehousing units to Mukesh Ambani's Reliance Retail in an acquisition deal of Rs 24,713 crore. Due to this, Amazon dragged the indebted Future Group to arbitration. In the end, Reliance Retail acquired the Future Group in response to the interim order.
After knowing its current position in the Pre-IPO market, Reliance Retail intends to strengthen its retail network by acquiring the assets, liability, retail stores, and stakes in a consumer business. It also involves merging the Future's Group listed entities, including Future Retail, Future Lifestyle, and Future Consumer, into Future Enterprises Limited (FEL).
Understanding The Business Model Of Future Group
To know the impact of this acquisition deal on Reliance Retail unlisted shares, we have to understand the business model of the Future Group. Future Group has been a prominent business in the e-commerce industry with a broad customer base. It is also known as "Walmart of India" and has a huge supermarket chain, including Big Bazaar.
Apart from it, Future Group also runs its lifestyle boutiques under the name "Brand Factory." Some companies under the Future Group are listed, directly benefiting Reliance Retail unlisted shares. Here are the different brands that operate under the Future Group:
- Future Retail Limited: Big Bazaar, Food Hall, Food Bazaar, FBB, HomeTown, and more
- Future Lifestyle Fashion Limited: Brand Factory, Planet Sports
The Future Group also advertises its sporting and styling brands, such as Lombard spalding bare and Indigo Nation, on various third-party online stores. Being a multi-retail brand commerce company, Future Group has over 20 small hypermarket outlets and over 200 supermarket stores available in different states of India.
The operation of Future Group depends on its two retail business models. One is Fashion Bazaar, a supermarket that includes Big Bazaar, and another is a hypermarket with a Food Hall. These retail models constitute the majority share of the company's overall revenue.
Reliance Retail's decision to acquire the Future Group will benefit it in the long run. One of the significant advantages for Reliance here is that they get the network of the already established retail chain business. In addition, the entities of Future Group are already listed on the stock exchange, which will help Reliance Retail create a demand for its unlisted shares.
Possible Impact Of This Acquisition Deal On Reliance Retail Unlisted Shares
This acquisition deal with Future Group is essential for Reliance Retail and its investors. As an unlisted company, Reliance Retail will look to expand its retail network and create a strategy to compete with Amazon. Due to its business expansion, there may be a high demand for Reliance Retail unlisted shares. Some of the possible impacts this acquisition deal might create on Reliance Retail unlisted shares:
High Price Of Unlisted Shares
There is a possibility that Reliance Retail's unlisted share price will increase in the future. One of the biggest reasons behind this is the high demand that might be caused after this acquisition deal. Reliance Retail will have a network of nearly 1800 retail stores, directly impacting its revenue and other financials.
As a result of business expansion, Reliance Retail Pre-IPO shares might also perform well, which increases its price. An unlisted shares price is subject to the company's performance which will improve after this acquisition deal.
Less Availability Of Unlisted Shares
There are higher chances that investors might be unable to buy Reliance Retail unlisted shares in the future due to the less availability. Since the company is on the way to expand its business operations, the availability of its unlisted shares can be uncertain in the future.
Investors planning to buy unlisted shares of Reliance Retail might not get it at a fair price. It is vital to create an investment strategy early to get long-term benefits with the availability of the unlisted shares of the fastest-growing company.
High Valuation
Another possible impact of this acquisition deal is a higher valuation of Reliance Retail. The value of any unlisted shares depends on various factors, which include the company's performance, market condition, and current unlisted share price.
In the case of Reliance Retail which will have additional retail stores, can benefit in terms of market valuation. It is expected that the market valuation of Reliance Retail will increase as the value of its assets positively affects the unlisted shares. The value of Reliance Retail Pre-IPO shares will improve as the share market conditions favour it.
Why Should You Invest In Reliance Retail Unlisted Shares?
As a retail investor, your priority while investing is to select a company with a positive growth rate. Reliance Retail is one of the fastest-growing companies in the retail sector, with a significant market share. The subsidiary of RIL decided to buy Future Group in an acquisition deal; there are higher chances that Reliance Retail's share price may go higher in the future.
Reliance Retail‘s unlisted shares might be perfect if you seek a profitable investment option. In the last month, the price of Reliance Retail Pre-IPO stock was Rs 2,350, which increased up to Rs 100 from April to May 2023. As per the recent data, Reliance Retail unlisted share price today is Rs 2,500. The price of its unlisted shares is expected to increase in the coming months. In addition, the company's financials also look good, as Reliance Retail's gross revenue increased by 42.9% in the second quarter of FY 23.
We advise you to analyse the company's financial report before buying Reliance Retail's unlisted shares. You should seek assistance from the best-unlisted shares broker in India, like Stockify. You will get expert advice based on investment in unlisted shares. We keep updating the company's financial report and share double-checked data like Reliance Retail unlisted share price, EBITDA, PAT, and more. Get in touch with us today!
FAQs
1- Is There Short-Term Capital Gain On Reliance Retail Unlisted Shares?
Ans- Yes, there is a short-term capital gain on Reliance Retail Pre-IPO shares. You must pay a predefined short-term capital gain if you sell your unlisted shares within two years.
2- How To Check The Updated Price Of Reliance Retail Unlisted Shares Online?
Ans- You can check the updated price of unlisted shares of Reliance Retail and other companies on Stockify. We keep updating the share price on our platform based on recent market data.
3- When Will Reliance Retail's IPO Launch?
Ans- There is no exact date released by Reliance Retail about its upcoming IPO. To keep updated with the recent news of its IPO, subscribe to Stockify.
4- Can I Sell Reliance Retail Unlisted Shares Easily Online?
Ans- You can sell Reliance Retail unlisted shares online by using online trading platforms like Stockify. Here, you can buy or sell unlisted shares by following simple steps.
5- What Is The Minimum Ticket Size For An Investment In Reliance Retail Unlisted Shares?
Ans- The minimum ticket size for investment in Reliance Retail Pre-IPO shares is 35-50K.
