RIL Raises Nearly Rs 50,000 Crore From Jio Platforms Deals With Facebook, Silver Lake

Soon after selling a stake in Jio Platforms Ltd. to Facebook Inc., Reliance Industries Ltd. brought in another investor for its digital and telecom assets.

Silver Lake, an American private equity firm, will invest close to Rs 5,656 crore in the newly created subsidiary of India's most valued company, according to an exchange filing. This takes the equity value of the unit to Rs 4.9 lakh crore, a 12.5 percent premium to Facebook's investment.

While the company didn't disclose how much stake the private equity firm will hold in Jio Platforms, according to BloombergQuint's calculations that should be close to 1.15 percent.

This comes nearly 15 days after Facebook put in $5.7 billion, or Rs 43,574 crore, for a 10 percent stake in Jio Platforms as part of the social media giant's efforts to expand footprint in its biggest global market.

But unlike the previous transaction, the entire investment in this case will be retained by Jio Platforms. After Facebook deal, while Jio Platforms retained Rs 14,976 crore, the parent got the remaining Rs 28,598 crore for redeeming the optionally convertible preference shares it held in the subsidiary.

Earlier, Reliance had announced plans to restructure its telecom and digital business by consolidating the ownership of its platform apps/AI/cloud initiatives into a separate 100 percent subsidiary, Jio Platforms. The entity also owns the mobile telecom and broadband business. The entity's debt will be transferred to RIL for which the parent will receive Rs 108,000-crore optionally convertible preference shares of Jio Platforms.

The restructuring was aimed at housing the digital assets within a debt-free entity and making the new entity comparable with global platforms such as Alphabet Inc., Tencent Holdings Ltd. and Alibaba Group Holding Ltd., among others, which are largely debt-free and have created large digital ecosystems.

This new deal, along with the rights issue and Facebook's investment, will lower RIL's consolidated debt by 64 percent over FY20 debt. The company's net debt stood at Rs 161,035 crore as of March 2020 and the owner of the world's largest crude oil refinery aims to bring this to zero by the end of 2020-21.

Over the past few quarters, Mukesh Ambani's conglomerate has been increasingly reliant on its newer consumer units, like retail and telecom, to hold up its earnings when the legacy businesses face pressure. The newer businesses, including telecommunications and retail, are likely to contribute 50 percent of RIL's earnings in a few years from about 32 percent now, Ambani had said during the company's 42nd annual general meeting in August.