Reliance Industries on Monday sealed another deal under which Silver Lake Partners of the US will pick up a stake in Jio Platforms, the group’s digital services arm, for Rs 5,655.75 crore.
The fresh investment in Jio Platforms comes less than a fortnight after Mark Zuckerberg-founded Facebook said it would invest $5.7 billion, or Rs 43,574 crore, for a 9.9 per cent stake in Jio Platforms.
Silver Lake is the global leader in technology investing, with approximately $40 billion in combined assets under management and committed capital and a team of approximately 100 investment and operating professionals located around the world.
The Silver Lake investment in the Reliance group’s digital business will give Jio Platforms an equity value of Rs 4.90 lakh crore and an enterprise value of Rs 5.15 lakh crore. It represents a 12.5 per cent premium to the equity valuation of the Facebook investment.
“I am delighted to welcome Silver Lake as a valued partner in continuing to grow and transform the Indian digital ecosystem for the benefit of all Indians. Silver Lake has an outstanding record of being a valuable partner for leading technology companies globally.
“Silver Lake is one of the most respected voices in technology and finance. We are excited to leverage insights from their global technology relationships for the Indian digital society’s transformation,” Mukesh Ambani, chairman & managing director of RIL, said.
The Silver Lake investment adds to a flurry of fund raising activity announced by the oil-to-telecom group in recent weeks, including a $7 billion share sale, as it aims to eliminate $21.4 billion net debt by the end of this year.
The Silver Lake stake sale amounts to 1 per cent of Jio Platforms stock. Last Friday, RIL had said it was in touch with several global investors for a stake sale that would match the 9.9 per cent selloff to Facebook. This would suggest that more deals are likely in the coming days.
RIL has already said it is looking at a capital raising of Rs 104,000 crore by the end of June 30, inclusive of the Facebook sale and the Rs 7,500 crore stake sale in its retail pump outlets to BP last year.
RIL has a gross debt of Rs 336,294 crore ($44.4 billion) and has liquid cash on its books of Rs 175,259 crore ($23.2 billion), leaving it with a net debt of Rs 1.61 lakh crore as of March 31, 2020. It hopes to become a zero net debt company by April next year.
Silver Lake has investments in Airbnb, Alibaba, Ant Financial, Alphabet’s Verily and Waymo units, Dell Technologies and Twitter.
“The US private equity firm Silver Lake’s investment of Rs 5,665 crore in RIL’s Jio Platforms coming close on the heels of a mega investment by the global tech major Facebook is a clear reinforcement of faith by global majors in RIL.
“Going forward, RIL will be valued as a tech firm and not as a petroleum company. As RIL becomes a zero debt company soon, there will be increased demand for the stock from investors, both local and global,’’ V.K. Vijayakumar, chief investment strategist at Geojit Financial Services, said.
Reliance on Thursday reported a 39 per cent fall in March quarter profit, hit by a sharp fall in oil prices and lower fuel demand.
The RIL stock on Monday ended with losses of 2.16 per cent, or Rs 31.65, at Rs 1,435.40.