Reliance In Process To Set Up $2.4-3 Billion InvIT To Monetise Retail Warehousing Assets: Report

An Infrastructure Investment Trust (InvITs) enables direct investment of money from individual and institutional investors in infrastructure projects to earn a small portion of the income as a return

Reliance Retail, the largest retailer in terms of revenue, scale, and profit, has already begun setting the framework for the potential InvIT of its warehouse assets.

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Reliance Retail, a subsidiary of Reliance Industries Ltd (RIL), has initiated the process to set up an infrastructure investment trust (InvIT) to unlock the value of the company's backend warehousing and related logistical assets. According to a report by the Economic Times, Reliance Retail Ltd has already registered a trust with SEBI at the end of February. 

The report said that India's largest retailer in terms of revenue, scale, and profit, has already begun setting the framework for the potential InvIT of its warehouse assets. The trust will store the warehouse assets that the group intends to monetise. 

According to NSE, an Infrastructure Investment Trust (InvITs) is a Collective Investment Scheme similar to a mutual fund, which enables direct investment of money from individual and institutional investors in infrastructure projects to earn a small portion of the income as a return.

The report said that RIL is planning to float the new unit either as a privately placed or listed InvIT and has started working on its financials and legal aspect. Besides the trust, RIL has also set up Intelligent Supply Chain Infrastructure Pvt Ltd, which will be looking into the management of the assets that will be under the new InvIT.

According to the company's memorandum of association, it has been established to build, develop, acquire, provide, manage, and operate storage, warehousing, supply chain, cold chain, logistics infrastructure, and facilities, the report said. 

RIL’s plan is to monetise its warehousing and logistics assets in the sector. Reliance Retail has been aggressively growing its warehousing capacity. The value of total assets that could be transferred to the InvIT could be around Rs 20,000-25,000 crore, the report said. 

Reliance Retail, the retail initiative of Reliance Industries Limited, has a presence across grocery, consumer electronics, pharmacy, fashion and lifestyle. It has brands such as Reliance Fresh, Reliance Digital, Trends, and Ajio.com. It has also entered into FMCG, and beauty vertical, Tira.

Reliance Retail had a warehousing portfolio of 33.6 million sq ft, as per the Q3 financials of RIL. The company added about 11.1 million sq ft of space in FY22, increasing its warehousing space to 22.7 million sq. ft. Reliance Retail increased its store count to 17,225 by the end of December 2022, up from 14,412 the previous year. 

The company bought Addverb Technologies, a provider of robotic equipment for automated material handling and solutions for warehouse automation. For bagging lines and warehouse storage location logistics, tasks that often require human assistance, it has been testing 5G robots and drones. The Rs 2,850 crore purchase of Metro Cash & Carry India Pvt Ltd will also help Reliance Retail Ventures Ltd (RRVL) expand its warehouse network for the B2B e-commerce platform JioMart Kirana and its B2C hypermarket operation, the report said. 

"Warehousing is emerging as the new asset class for InvITs. A lot of capital has gone into building top-class warehouse space for industries such as retail, e-commerce, industrials, pharma, etc. More warehousing InvITs are expected to come up, given the huge demand for warehousing space in a growing economy like India," an investment banker told ET.

According to the report, Nexus Select Trust REIT, India's first real estate investment trust incorporating retail assets, is expected to conduct its initial public offering in the first week of May.