SUMMARY
With this, Reliance will control 83% equity of Grab
The company said Grab will support its digital commerce initiatives
Reliance will further invest $5.63 Mn in Grab by 2021
In the days following reports of Reliance in talks to acquire logistics startup Grab, the acquisition became official on Saturday (March 2).
In a BSE filing, the Mukesh Ambani-led Reliance Industries said that its wholly-owned subsidiary Reliance Industrial Investments and Holdings Limited (‘RIIHL’) will acquire equity shares of Grab A Grub Services Private Limited (‘Grab’) in a cash deal worth $14.9 Mn (INR 106 Cr).
At a later stage, the company will also invest up to $5.63 Mn (INR 40 Cr) to complete the acquisition deal by March 2021.
With this, Reliance will control 83% equity of Grab on a fully diluted basis. The investment will support Reliance Group’s “digital commerce initiatives and strengthen its logistics services, catering to both B2B and B2C segments.”
Grab was founded in 2013 by Jignesh Patel, Nishant Vora, and Pratish Sanghvi and provides services ranging from on-demand, reverse deliveries, first mile, and last mile logistics. Some of its clients include McDonalds, BigBasket, Myntra, Amazon Now, Swiggy.
The company has raised $7.18 Mn till date, with last being $1.5 Mn (INR 9 Cr) funding from SIDBI Venture Capital Arm, SIDBI Venture Capital Limited (SVCL) in February 2018. Other investors include Aramex, Zomato and Sixth Sense Ventures.
The Ecommerce Plans Of Reliance
Throwback to 2016. The lure of free calls and free internet by Reliance Jio changed the telecommunications industry and the relationship of Indians with the internet. Used to limits of 1GB data per month, consumers started using 1GB per day. Other telcos followed and soon ecommerce and video streaming services grew rapidly.
So, when Ambani announced that Reliance Retail and Reliance Jio Infocomm will jointly launch a new ecommerce platform, the expectations for a disruption followed. He said that the ecommerce plan will be beneficial to consumers, retailers and producers and will also help about 3 Cr small shopkeepers across the country.
The company is expected to follow a hybrid model. Under this plan, the company is aimed at creating shared profitability by integrating the offline stores of three crore small retail players via Reliance Jio, RIL’s online platform.
Reliance Retail is planning to use more than 5,100 Jio point stores across 5,000 cities and towns as delivery and collection points for its ecommerce venture. The initiative is expected to begin in April, this year.
Not one to dream small, Ambani is now looking to challenge global ecommerce giant Amazon, which has committed $5 Bn to Indian ecommerce, and Walmart-owned Flipkart, which was acquired for $16 Bn in August 2018.
A recent Deloitte India and Retailers Association of India (RAI) report said that India’s ecommerce market is worth $200 Bn at present and will grow to $1.2 Tn by 2021.
