The company of billionaire Mukesh Ambani has emerged as the mystery suitor out of India considering an acquisition of the iconic Australian department store David Jones.
Mr Ambani owns the Mumbai-based Reliance Industries, which includes the subsidiary Reliance Retail.
The interest by Reliance is understood to be only in the early stages, with Woolworths Holdings chief executive Roy Bagattini telling The Australian on Thursday after delivering its results that the company had not yet received any approaches from an Indian group.
It is understood Mr Ambani’s ambitions for David Jones centre on improving the performance of the department store.
No doubt a big attraction to David Jones for Reliance will be its two flagship properties in central Sydney and Melbourne that are up for sale through UBS.
Should Reliance acquire David Jones and improve its performance, the company could possibly sell the properties further down the track for a higher price when the market improves.
So far, the department store’s owner, Woolworths South Africa, is understood to have received offers for the Sydney property on Elizabeth Street in the range of $400m to $500m, with the Melbourne property’s performance hamstrung by COVID-19 lockdowns.
Reliance has a reputation for being attracted to companies with real estate attached and has a major exposure to the affordable apparel market.
The business is cashed up and also runs food mini markets, a large jewellery business and trend retail.
It sells electronic goods, food, groceries and lifestyle and home improvement products.
An acquisition of David Jones would be a shift upmarket for Reliance from its discount department stores.
Reliance Retail is the largest retailer in India and generates about $US23bn ($31.4bn) annually. It made $US1.4bn of operating income during the 2019 financial year.
Private equity firm Silver Lake has a small stake in the business.
The company has been highly acquisitive of late, buying the Retail and Wholesale Business and the Logistics and Warehousing Business from the Future Group for $US3.5bn last month, adding 16 million sq feet of retail space to the company.
Woolworths South Africa bought David Jones for $2.1bn in 2014, but the business has failed to fire for the company, with the department store suffering losses and major writedowns.
It has been working with KordaMentha and UBS to find ways to reduce its debt.
Its Australian operations, which include Country Road, had $708m of interest-bearing debt and $342m of net cash.
David Jones swung to a $33m loss for the 2020 financial year as the pandemic took its toll, also causing revenue to fall 6.4 per cent to $2.06bn.
It made a $37m profit in 2019.
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