Reliance Industries on Friday (June 5) announced the sale of 1.85 per cent stake in its digital unit to Abu Dhabi-based sovereign investor Mubadala for ₹9,093.60 crore, the sixth deal in as many weeks that will inject a combined ₹87,655.35 crore in the oil-to-telecom conglomerate to help it pare debt.
“Mubadala Investment Company (Mubadala), will invest ₹9,093.60 crore in Jio Platforms at an equity value of ₹4.91 lakh crore and an enterprise value of ₹5.16 lakh crore,” the company said in a statement.
With this investment, Jio Platforms has raised ₹87,655.35 crore from leading global technology and growth investors including Facebook, Silver Lake, Vista Equity Partners, General Atlantic, KKR and Mubadala in less than six weeks.
Facebook picked up 9.99 per cent stake in the firm that houses India’s youngest but largest telecom firm on April 22 for ₹43,574 crore. Within days of that deal, Silver Lake – the worlds largest tech investor – bought a 1.15 per cent stake in Jio Platforms for ₹5,665.75 crore.
On May 8, US-based Vista Equity Partners bought 2.32 per cent stake in Jio Platforms for ₹11,367 crore. On May 17, global equity firm General Atlantic picked up 1.34 per cent stake in Jio Platforms for ₹6,598.38 crore. This was followed by US private equity giant KKR buying 2.32 per cent for ₹11,367 crore.
Jio Platforms, a wholly-owned subsidiary of Reliance Industries Ltd, is a next-generation technology company. Reliance Jio Infocomm Ltd, with 388 million mobile subscribers, will continue to be a wholly-owned subsidiary of Jio Platforms.
Mukesh Ambani, Chairman and Managing Director of Reliance Industries, said Mubadala is one of the most astute and transformational global growth investors. “Through my longstanding ties with Abu Dhabi, I have personally seen the impact of Mubadala’s work in diversifying and globally connecting the UAEs knowledge-based economy. We look forward to benefitting from Mubadala’s experience and insights from supporting growth journeys across the world,” he said.
Khaldoon Al Mubarak, Managing Director and Group CEO, Mubadala Investment Company, said, “We are committed to investing in, and actively working with, high growth companies which are pioneering technologies to address critical challenges and unlock new opportunities.”
“We have seen how Jio has already transformed communications and connectivity in India, and as an investor and partner, we are committed to supporting India’s digital growth journey. With Jio’s network of investors and partners, we believe that the platform company will further the development of the digital economy.”
To further its commitment to innovation and technology, Mubadala established its Ventures arm in 2017 to partner early with visionary founders and support innovative businesses. Mubadala’s Ventures business currently manages several venture funds in the US, Europe and Middle East.
At present, Mubadala’s portfolio spans advanced manufacturing, semiconductors, metals & mining, pharmaceutical and medical technology, renewable energy and utilities, and the management of diverse financial holdings. The transaction is subject to regulatory and other customary approvals.
Morgan Stanley acted as financial advisor to Reliance Industries and AZB & Partners, and Davis Polk & Wardwell acted as legal counsel. Ambani, 63, chairman and managing director of Reliance, had in August last year set a target of March 2021, to make his conglomerate net debt-free. But thanks to the Facebook deal, a ₹53,125 crore rights issue, private equity investments, and more stake sale to companies such as Saudi Aramco, the target is likely to be achieved by December.
At the end of March quarter, Reliance had an outstanding debt of ₹3,36,294 crore and cash in hand of ₹1,75,259 crore. After adjusting cash, the net debt came to ₹1,61,035 crore. Of the outstanding debt, ₹2,62,000 crore is on Reliance books and ₹23,000 crore is with Jio.