Yahoo Finance Asia's richest man offers Amazon $20bn stake in Reliance retail arm
Asia’s richest man Mukesh Ambani has offered to sell a roughly $20bn (£15.4bn) stake in the retail arm of Reliance Industries to Amazon, offering Jeff Bezos a chance to secure a foothold in India.
Amazon is said to have held talks with the Indian conglomerate over an investment into Reliance Retail Ventures, with the potential to take up to a 40pc stake in the business, according to Bloomberg.
Amazon’s boss and world’s richest man has long sought to expand his empire to India, but has struggled to get up and running in a country where most purchases continue to be offline. India’s retail market is estimated to be worth $1tn.
If a deal is successful, the e-commerce giant will find itself with a powerful new partner in the form of Reliance, which has increasingly been looking to branch out from its core chemicals, energy and telecoms divisions into e-commerce.
At present, Reliance has almost 12,000 brick and mortar stores across India. The e-commerce market in the country is expected to be worth $84bn next year, up from just $2.4bn in 2010.
In January, Mr Bezos made a trip to India to visit small businesses and sites, and made a pledge to create 1m new jobs in the country by 2025, with continued investments in areas such as technology, infrastructure and its logistics network.
Reliance said it “evaluates various opportunities on an ongoing basis” but refused to comment on “speculation”. Amazon declined to comment.
The US tech giant, which launched its first online shopping site in India in 2013, has created 700,000 jobs in India since its arrival there, but the visit by Mr Bezos attracted criticism from small traders accusing the company of aggressive pricing strategies.
Amazon is also facing a monopoly probe from the Competition Commission of India following allegations from a local trade group that the company has engaged in practices that unfairly disadvantage them. Amazon said at the time that it welcomes the opportunity to address the allegations.
Experts had warned that Amazon would struggle to put up a fight if it was to directly rival Reliance in India, where Mr Ambani has come to wield considerable influence and foreign companies have struggled to scale as the government has looked to favour domestic firms.
Chris Beauchamp, chief market analyst at IG, a trading service, noted that benefits would come in both directions, as Reliance would be looking to tap into Amazon's years of work in online shopping.
"If you're looking to boost your e-commerce element as Reliance probably is then Amazon is your go-to to bring the expertise," he said. "The quid pro quo is Amazon gets a needed foothold in the Indian market."
Neil Campling, analyst at Mirabaud Securities, described a potential deal as a "great opportunistic strike" for Amazon at a time when deteriorating ties between India and Beijing meant companies from China would face greater challenges in competing.
"The anti-China rhetoric in India prevents the other biggest global player, Alibaba, getting a foothold," he said.
"Get a significant stake which provides insight on the unique logistic challenges for a huge untapped market, layer in the technology, AI and scale economic know how of Amazon and you have a perfect match."
The investment in Ambani’s retail ventures comes after he raised $20bn selling stakes in his technology venture - Jio Platforms - to investors including Facebook and Google.
The 63-year-old-tycoon, who’s added $24bn to his personal wealth this year, told shareholders in July that the retail unit would be next in line for investors to come on board.
