Looking to expands on to its ambitions of entering the booming online retail sector. Reliance Industries has acquired a majority stake in a Google-funded startup Fynd. The investment has been made by RIL’s subsidiary, Reliance Industrial Investments & Holdings. The Mumbai-based startup mainly helps offline retailers connect with online retailers and consumers. Both companies announced the deal in a statement.
Reliance Industries has spent Rs 295.25 crore to acquire the startup, currently holding 86 percent equity of the company.
Fynd, which was founded in September 2012, and Google was one of the earliest investors in the startup. It acts as a bridge between physical retail stores and buyers online. The startup helps offline retailers sell their products to consumers directly through its online store, and also enables them to connect with other “demand channels” such as third-party e-commerce platforms Amazon India and Walmart-owned Flipkart.
While Google and the other early investors are exiting the firm, its founders have held onto their equity, said Harsh Shah, who founded the firm along with Farooq Adam and Sreeraman Mohan Girija.
RIL said that the investment would further enable the group’s digital and new commerce initiatives. The company is gearing up to launch services like e-commerce to leverage its huge reach through Reliance Jio Infocomm.
The news has come amidst reports regarding talks of a potential multi-billion dollar deal between Reliance chairman Mukesh Ambani and Amazon’s Jeff Bezos. Amazon.com Inc is in discussion with Reliance Industries’ retail unit to buy a stake in India’s biggest brick-and-mortar retailer.
Amazon’s massive online presence could help bolster Reliance’s consumer and private labels business. More importantly, a potential partnership will help the duo counter Walmart, which last year invested $16 billion in Flipkart, in their battle for a bigger share of India’s fast-growing e-commerce market.
More than 600 brands, including Nike and Raymond, are connected through Fynd. About 9,000 stores are also connected through Fynd’s online platform. Interestingly one of its big customers was also Reliance Retail that has been working with the startup for the last six years. Reliance Retail already owns 25 brands operated by Fynd. The deal seems like a part of well thought long term plan to enter the e-commerce space in the domestic market.
Fynd is Mukesh Ambani-led RIL’s seventh major acquisition this year. The company had earlier announced that Reliance Retail and Reliance Jio are working to build an e-commerce platform. Fynd will continue to work separately and Reliance has come in as a majority stakeholder
RIL said that its subsidiary has an option to further invest Rs 100 crore in Shopsense Retail Technologies, which runs Fynd, by December 2021. This will take RIL’s total stake to 87.6% in Fynd.
In December last year, the government modified rules around foreign direct investment (FDI) in e-commerce, creating additional hurdles for companies such as Amazon and Flipkart, and giving companies such as Reliance an edge.