Reliance Industries on Sunday announced the sale of 1.34 per cent stake in its digital unit to global equity firm General Atlantic for Rs 6,598.38 crore, the fourth deal in less than four weeks that will inject a combined Rs 67,194.75 crore in the oil-to-telecom conglomerate to help it pare debt.
“This investment values Jio Platforms at an equity value of Rs 4.91 lakh crore and an enterprise value of Rs 5.16 lakh crore. General Atlantic’s investment will translate into a 1.34 per cent equity stake in Jio Platforms on a fully diluted basis,” the company said in a statement.
The deal follows Facebook picking up a 9.99 per cent stake in the firm that houses India’s youngest but largest telecom firm on April 22 for Rs 43,574 crore. Within days of that deal, Silver Lake – the world’s largest tech investor – bought a 1.15 per cent stake in Jio Platforms for Rs 5,665.75 crore. On May 8, US-based Vista Equity Partners bought 2.32 per cent stake in Jio Platforms for Rs 11,367 crore.
“With this investment, Jio Platforms has raised Rs 67,194.75 crore from leading technology investors, including Facebook, Silver Lake, Vista Equity Partners and General Atlantic in less than four weeks,” the statement said.
Strategic and financial investors are to form 20 per cent of Jio Platforms. Between the four deals, Reliance has sold 14.8 per cent of Jio Platforms and more such investments are likely in near future.
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 Rs 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 Rs 3,36,294 crore and cash in hand of Rs 1,75,259 crore. After adjusting cash, the net debt came to Rs 1,61,035 crore.
Of the outstanding debt, Rs 2,62,000 crore is on Reliance books and Rs 23,000 crore is with Jio.
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.
General Atlantic is a leading global growth equity firm with a 40-year track record of investing in the technology, consumer, financial services and healthcare sectors. It has a longstanding tradition of backing disruptive entrepreneurs and companies around the world, including Airbnb, Alibaba, Ant Financial, Box, ByteDance, Facebook, Slack, Snapchat, Uber and other global technology leaders.
Mukesh Ambani, Chairman and Managing Director of Reliance Industries, said, “I have known General Atlantic for several decades and greatly admired it for its belief in India’s huge growth potential. We are excited to leverage General Atlantic’s proven global expertise and strategic insights across 40 years of technology investing for the benefit of Jio”.
Bill Ford, Chief Executive Officer of General Atlantic, said that as long-term backers of global technology leaders and visionary entrepreneurs, GA could not be more excited about investing in Jio.
“We share Mukesh’s conviction that digital connectivity has the potential to significantly accelerate the Indian economy and drive growth across the country. General Atlantic has a long track record working alongside founders to scale disruptive businesses, as Jio is doing at the forefront of the digital revolution in India,” Ford said.
Akash Ambani, Director of Reliance Jio, said: “We are delighted that a renowned global investor like General Atlantic is partnering with us in our journey to digitally empower India and Indians”.
Jio is committed to make a digitally inclusive India that will provide immense opportunities to every Indian citizen especially to highly talented youth. General Atlantic’s endorsement and partnership energises Jio’s young team to set, and achieve, even more ambitious goals in our onward march, he noted.
Sandeep Naik, Managing Director and Head of India & Southeast Asia at General Atlantic, said, “General Atlantic has nearly two decades of experience of investing in India, and specifically in founder-led businesses that are based upon principles of enablement, inclusion and progress”.
In just three and a half years, Jio has had a transformational impact in democratising data and digital services, propelling India to be positioned as a leading global digital economy, Naik added.
The transaction is subject to regulatory and other customary approvals.
Morgan Stanley acted as financial advisor to Reliance and AZB & Partners, and Davis Polk & Wardwell acted as legal counsel. Paul, Weiss, Rifkind, Wharton & Garrison and Shardul Amarchand Mangaldas & Co acted as legal counsel to General Atlantic.