Reliance Industries has created an Infrastructure Investment Trust (InvIT). The assets that could be transferred to this Trust are worth USD 2.7 to 3 billion, with more added as it becomes operational. The InvIT will help utilise Reliance Retail’s backend warehousing and logistics assets. The group’s retail arm started the groundwork for the proposed InvIT for its warehousing assets, setting up a registered trust, the Intelligent Supply Chain Infrastructure Trust, with the Securities and Exchange Board of India (Sebi) in February. The Trust will house warehousing assets that the group intends to monetise.
Reliance plans to structure the Trust as privately placed or listed. As per SEBI norms, it will need a minimum of five shareholders for registration. Its Intelligent Supply Chain Infrastructure will supervise the management of assets housed under InvIT. The Memorandum of Association submitted to the Registrar of Companies mentions that the aim of InvIT is to develop, construct, acquire, manage, provide, and continue the business of supply chain, storage, warehousing, cold chain, logistics infrastructure and facilities.
Reliance Retail’s warehousing space has expanded three times in the last three years. It added 11.1 million square feet last year to secure 33.6 million square feet of warehousing space in 2022. Its stores also increased from 14,412 in 2021 to 17,225 at the end of 2022.
Reliance Group bought a majority stake in Addverb, which serves warehousing automation solutions and 5G-enabled robotic systems for automated material handling. It has experimented with 5G robots for drones, bagging lines and warehouse storage location logistics, which was earlier manually controlled.
Reliance Retail’s cash and carry business, Reliance Market, was shut during the pandemic. Its facilities were converted into warehouses and fulfilment centres to support the Kirana eCommerce business. They can leverage the unlocking of value if they set up an InvIT for storefronts. Their target may be Nexus Malls once it launches the ₹ 4,000-crore IPO in May first week. If everything goes as planned, this will be the Reliance Group’s fourth infrastructure-based Trust after the oil pipeline and Jio telecom towers.
To set up an InvIT, the sponsor sets up the trust and transfers assets to it; the trustee holds the assets in the Trust for the shareholders’ benefit; the investment manager decides on divestments, acquisitions, and fundraising; and the project manager manages day-to-day operations of the underlying assets.
