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Close on the heels of its mega Facebook deal, Jio Platforms, a wholly-owned subsidiary of Reliance Industries (RIL), has entered into an agreement to raise ₹5,655.75 crore from global PE major Silver Lake Partners.
The company, led by Mukesh Ambani, will offload a 1.15 per cent stake to Silver Lake, which had invested across sectors. The investment will go into Jio Platforms.
This values Jio Platforms at an equity value of ₹4.90-lakh crore, an enterprise value of ₹5.15-lakh crore and represents a 12.5 per cent premium to the equity valuation of the Facebook deal. RIL had earlier said it had received “similar interest” from other global investors.
On April 22, Facebook has signed an agreement to invest ₹43,574 crore in Jio Platforms, making it the largest investment for a minority stake by a technology firm.
“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,” RIL Chairman and Managing Director Mukesh Ambani said.
“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,” he added.
Morgan Stanley was the financial advisor to RIL and AZB & Partners and Davis Polk & Wardwell were the legal counsels.
Rising focus on tech
The Silver Lake deal is an evidence of the group’s increasing focus on technology.
“Over the last two years, RIL, most probably for Jio Platforms, has acquired companies that are from industries ranging from AI to blockchain. With Mukesh Ambani's increasing focus on technology for value creation, it would be ideal to have Silver Lake’s experience,” Anas Rahman Junaid, Managing Director and Chief Researcher at Hurun India told BusinessLine .
RIL had invested in tech companies such as Embide and Nowfloats (edutech), Saavn and Grab (media and entertainment), Haptik and Vakt Holdings (AI), Fynd and C-Square (e-commerce), Reverie (Saas) and Netradyne (logistics) in the last two years.
Zero net debt by March 2021
“The investment further illustrates RIL’s ability and willingness to monetise its digital services business and reinforces the company’s commitment to achieve a zero net debt position by March 31, 2021,” Vikas Halan, Senior Vice President, Corporate Finance at Moody’s Investors Service said.
According to an Axis Capital report, the investment will be used to redeem optionally convertible preference shares held by RIL (will go to RIL). It would also help in pegging equity value of Jio Platforms (owning Jio Infocomm) and improve cash flows.
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