BENGALURU (Reuters) - India's Reliance Industries Ltd said on Wednesday private equity firm General Atlantic will invest 36.75 billion rupees ($498.31 million) for a 0.84% stake in its retail arm, sending shares of the country's most valuable company up as much as 1%.

The deal underscores growing investor interest in the Mukesh Ambani-led company's expansion plans as it diversifies from its mainstay oil-and-gas business. Reliance is being seen as a formidable rival to Amazon.com Inc and Walmart Inc's Flipkart as they battle for market dominance in India.

Wednesday's investment gives Reliance Retail a pre-money valuation of 4.29 trillion rupees ($58.17 billion), the company said.

Reliance, which in May launched an online grocery service, also operates around 12,000 brick and mortar stores.

Chairman Mukesh Ambani said Reliance would leverage General Atlantic's "extensive expertise at the intersection of technology and consumer businesses" to expand its new commerce venture, tying neighbourhood stores for online deliveries of groceries, apparel and electronics.

With the latest investment from General Atlantic — which has also invested in Airbnb, Slack and Uber — Reliance has now raised around $2.3 billion for its retail arm.

General Atlantic is also an investor in Reliance's digital business Jio platforms, and sources told Reuters this week Abu Dhabi state fund Mubadala Investment Co is in advanced talks to invest up to $1 billion in the company's retail unit.

In India, competition for market share has prompted e-commerce players to look for new partnerships. Financial daily Mint reported on Tuesday U.S. retailer Walmart was in talks to invest up to $25 billion in Tata Group's planned "super-app", which will tie in all of the conglomerate's consumer businesses.

Reliance Industries' shares rose as much as 1% to 2,267 rupees as of 0413 GMT.

(Reporting by Philip George in Bengaluru; Editing by Shounak Dasgupta)