India's Reliance strikes third unit stake deal, raises $8b in 2 weeks


  • Corporate News
  • Friday, 08 May 2020

A vendor weighs vegetable next to an advertisement of Paytm, a digital payments firm, hanging amidst his vegetables at a roadside market in Mumbai, India. Reliance Industries Ltd started testing its online shopping portal three days after Facebook Inc said it will invest US$5.7bil in digital assets controlled by billionaire Mukesh Ambani. - Reuters

NEW DELHI: India's Reliance Industries Ltd on Friday announced a $1.5 billion stake sale in its digital unit Jio Platforms, a third deal in little over two weeks that will inject a combined $8 billion in the telecoms-to-energy group to help it pare debt.

Private equity firm Vista Equity Partners is buying a 2.32% stake in Jio Platforms, the unit that houses Reliance's telecoms venture Jio Infocomm, for 113.67 billion rupees ($1.5 billion), Mumbai-headquartered Reliance said in a statement.

The investment gives Jio Platforms an equity value of 4.91 trillion rupees and an enterprise value of 5.16 trillion rupees, said Reliance, which is controlled by billionaire tycoon Mukesh Ambani.

The deal comes after Reliance cut a $5.7 billion deal with Facebook for a 9.99% stake in Jio Platforms on April 22, and just days after it secured a $750 million investment from private equity firm Silver Lake.

The deals, along with its plan to sell $7 billion in new shares, will help Reliance meet its target of eliminating $21.4 billion of net debt by the end of the year.

The negotiations between Reliance and Vista were built off of personal connections made between the private equity firm's founder Robert Smith and Ambani, a person familiar with the matter said.

The discussions were led by Ambani's close aide Manoj Modi and Brian Sheth, co-founder of Vista who is half-Indian and whose father hails from Ambani's home state of Gujarat, the source added.

Unlike traditional mobile carriers which depend on voice services to make money, Ambani has pitched Jio as a trailblazer tech company by offering cheap mobile data plans that helped hundreds of millions of Indians use the Internet for the first time.

Ambani is set to roll out a new retail venture, which combined with Jio and interests in education, music and films, could pose a challenge to established e-commerce firms such as Amazon and Walmart's Flipkart.

Shares in Reliance rose 2.3% in a broader Mumbai market which was trading 1.2% higher at 0442 GMT.

Reliance last month reported a 39% decline in March quarter profit, hit by a sharp fall in oil prices and lower fuel demand.

Vista Equity has more than $57 billion in capital commitments and has invested in companies across sectors including media and entertainment, healthcare and real estate. - Reuters

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