Reliance Industries Ltd said on Monday private equity firm Silver Lake will invest nearly $750 million (Rs. 5,656 crores) in its digital arm, days after securing a $5.7 billion (Rs. 43,574 crores) investment from Facebook, boosting its efforts to cut debt. The deal adds to a flurry of fund-raising activity announced by the oil-to-telecoms conglomerate in recent weeks including a $7 billion (roughly Rs. 53,035 crores) share sale, with plans to eliminate $21.4 billion (roughly Rs. 1.62 crores) of net debt by the end of the year.
Reliance last week reported a 39 percent slump in March quarter profit, hit by a sharp fall in oil prices and lower fuel demand, and said at the time it had received investor interest for a Facebook-like deal. It did not give further details.
The Rs. 5,656 crores ($746.7 million) deal with Silver Lake values Jio Platforms – the digital services entity that houses Reliance’s telecoms arm Jio Infocomm, its music and video streaming apps, at about $65 billion (roughly Rs. 4.9 lakh crores), Reliance said in a regulatory filing.
Silver Lake’s investment, at a 12.5 percent premium to the equity valuation of the Facebook deal, gives it slightly more than a 1 percent stake in Jio Platforms.
“Silver Lake has an outstanding record of being a valuable partner for leading technology companies globally,” Reliance Chairman and tycoon billionaire Mukesh Ambani said in a statement. “We are excited to leverage insights from their global technology relationships for the Indian digital society’s transformation.”
Silver Lake has about $40 billion (roughly Rs. 3.03 lakh crores) in assets under management, and its portfolio of companies includes social media firm Twitter, computer hardware maker Dell Technologies, and movie theatre chain AMC Entertainment Holdings.
Unlike traditional mobile carriers, which depended on voice services to make money, Ambani has always pitched Jio, which launched in late 2016, as a trailblazer tech company that has helped hundreds of millions of Indians use the Internet for the first time.
Facebook said late last month it would buy a 9.99 percent stake in Jio Platforms, as it looks to capitalise on WhatsApp’s 400-million strong user base in India and roll out services for grocers and small businesses.
The partnership will help Reliance use Facebook’s tech in its new businesses, while giving the US tech giant’s India reach a massive fillip with a formidable partner in Ambani, who is widely perceived to be influential in government circles.
Silver Lake’s investment highlights Reliance’s ability to monetise its digital services business and further adds to the company’s already strong financial flexibility, Moody’s Investors Service said in a note.
Shares in the Mumbai-headquartered Reliance were trading down 1.3 percent in a broader Mumbai market that was down 4.9 percent at of 10:25am IST.
© Thomson Reuters 2020