An Exit Plan For Reliance Retail Employees Values The Company At A Discount

Reliance Retail Ltd., the retail arm of India’s largest company by market capitalisation, valued itself at Rs 2.8 lakh crore, a discount of nearly 14 percent compared to analyst estimates, according to disclosures made on its website and BloombergQuint’s calculations.This comes after Reliance Retail received requests from its employees holding equity shares for providing them options to exit, according to the company’s disclosures. India’s largest retailer said it doesn’t have any plan for listing of its equity shares on the stock exchanges.As per the scheme of arrangement uploaded on Reliance Industries Ltd.’s website, the shareholders of Reliance Retail holding shares in physical form on record date will get one share of RIL for every four shares.To be clear, the scheme of arrangement doesn’t involve RIL. Pranatharthi Commercials Pvt. Ltd., set up by two Reliance group employees—Raja Kolumum Ramachandran and Laxmidas Vallabhdas Merchant, will acquire these shares from the market and swap the same with the specified shareholders of Reliance Retail, according to the scheme.The share swap ratio puts the value of Reliance Retail at 28 percent of Mukesh Ambani-controlled RIL’s valuation, according to the scheme of arrangement and the Dec. 17 order of the National Company Law Tribunal, Mumbai. The scheme of arrangement between Reliance Retail and Pranatharthi Commercials was uploaded on Dec. 11, but no formal announcement was made by the company on the exchanges.Given the share swap ratio and the number of shares held by these shareholders, Pranatharthi Commercials will have to acquire at least 8.94 lakh shares. This values the retail arm of India’s most valued firm at around Rs 2.79 lakh crore, according to BloombergQuint’s calculation..Consumer Units Replace Refining As RIL’s Second-Biggest Business.The share exchange ratio was determined by BDO Valuation Advisory LLP and Ernst & Young Merchant Banking Services LLP.The derived valuation, based on the data provided in the scheme of arrangement, is nearly 14 percent lower compared to analyst estimates. An average of eight analysts had valued Reliance Retail at Rs 3.25 lakh crore in their latest notes..Reliance Retail contributes nearly 10 percent to RIL’s consolidated operating profit. Its revenue jumped over ninefold in six years through March 2019, while its operating soared over 17 times, mainly on the back of store expansion in tier III and tier IV cities.Shareholders will meet on Jan. 23, 2020 to approve the scheme, as per the NCLT order..How To Sign Up For BloombergQuint Story Notifications

An Exit Plan For Reliance Retail Employees Values The Company At A Discount

The share swap ratio puts the value of Reliance Retail at 28 percent of Mukesh Ambani-controlled RIL’s valuation.

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