General Atlantic, Oakley said to near EUR1 billion deal for Brevo

General Atlantic, Oakley said to near EUR1 billion deal for Brevo

Reliance Industries Ltd (RIL) has announced a significant restructuring of its fast-moving consumer goods (FMCG) business. The company is consolidating its FMCG operations under a new entity, New Reliance Consumer Products Ltd (New RCPL), which will be a direct subsidiary of RIL. This move comes as part of a broader strategy to streamline operations and enhance the valuation of the FMCG business.

The restructuring will involve transferring the FMCG brands from Reliance Retail Ltd (RRL) to its parent company, Retail Ventures Ltd (RRVL), on a slump-sale basis. The existing FMCG entity, Reliance Consumer Products Ltd (RCPL), will be amalgamated with RRVL, and the consolidated "consumer brands business undertaking" will be demerged into New RCPL.

Notably, the nine global investors currently holding around 13% stake in RRVL will maintain similar stakes in New RCPL. These investors include Silver Lake, KKR, Mubadala, Abu Dhabi Investment Authority, GIC, TPG, Qatar Investment Authority, Saudi Arabia's Public Investment Fund, and General Atlantic. This decision is aimed at facilitating the raising of additional funds for the FMCG business and potentially improving its valuation.

The restructuring is expected to have a positive impact on the financial health of the FMCG business. According to the latest balance sheet of RCPL, the company clocked ₹1,301 crore in revenue from operations in 2024-25, with a net profit of ₹9 crore. However, RIL has declared that the FMCG business clocked sales of ₹11,450 crore during the fiscal, its second year of operation.

Separately, RRL has significantly reduced its total debt by 30% year-on-year in 2024-25, bringing it down to ₹56,212 crore from ₹81,060 crore. This reduction in debt is attributed to a sharp decline in inter-corporate borrowings from the holding company, RRVL.

The restructuring process is being facilitated by EY, a merchant banker involved in the process. According to EY's document, once the scheme is implemented, all shareholders of RRVL will also become shareholders of New RCPL, with their shareholding in New RCPL mirroring their shareholding in RRVL.

The restructuring is a strategic move by RIL to consolidate its FMCG business and position it for future growth. The company's FMCG business, barely two years old, has already challenged large brands such as Coca-Cola and PepsiCo in the beverage segment with its Campa brand. The consolidation of the FMCG business under New RCPL is expected to enhance operational efficiency and provide a clear path for future expansion.

References:
[1] https://economictimes.indiatimes.com/industry/cons-products/fmcg/big-reliance-retail-investors-to-hold-similar-stakes-in-fmcg-entity/articleshow/123028945.cms