India’s leading company, Reliance Industries Ltd. (Reliance) has agreed to sell some shares worth $750 million in its digital arm, Jio to an American private equity firm, Silver Lake Partners (Silver Lake). The new move of Reliance was announced some days after the conglomerate group secured a $5.7 billion investment from Facebook Inc. (Facebook) and these investments would help the group to reduce its existing debt.
Rising Investments in Reliance’s Jio
In recent weeks, Reliance has forged several deals to add up its existing funds including a $7 billion share sale, aiming to eliminate $21.4 billion of its net debt by the end of the year since many of its businesses had been hit badly by the coronavirus pandemic. Last week, the Indian conglomerate group reported a 39% loss of profit in the March quarter due to a sharp decline in oil prices and lower demand for fuel due to the government’s policy on travel restrictions.
Silver Lake’s investment, which is at a 12.5% premium to the equity valuation of the Facebook deal, will now own nearly more than a 1% stake in Jio Platforms. With this new investment of a 56.56 billion rupees ($746.7 million) from Silver Lake, the market capitalization of Jio Platforms – the digital services entity that houses Reliance’s telecoms arm, Jio Infocomm, its music and video streaming apps, is estimated at about $65 billion, Reliance said in a regulatory filing.
Reliance’s Chairman and tycoon billionaire, Mukesh Ambani said in a statement, “Silver Lake has an outstanding record of being a valuable partner for leading technology companies globally,” adding that “We are excited to leverage insights from their global technology relationships for the Indian digital society’s transformation.”
Strengthening Reliance’s Financial Flexibility
The latest investment from Silver Lake, which has about $40 billion in assets under management, would help to boost Reliance’s financial positions and could focus on its digital services in India and abroad. Moody’s Investors Service said in a note, “Silver Lake’s investment highlights Reliance’s ability to monetize its digital services business and further adds to the company’s already strong financial flexibility.”
Reliance, under the vision of Ambani, has brought a tremendous change in digital services in India. Unlike traditional mobile carriers, which depended on voice services to make money, Ambani has launched Jio in late 2016 and transformed hundreds of millions of Indians to use the Internet on a very large scale.
With the investment from Facebook, which had agreed to buy a 9.99% stake in Jio Platforms last month, Reliance set its plans to roll out its services for grocers and small businesses since Facebook-owned WhatsApp has a strong user base of more than 400 million in India. Meanwhile, the partnership would also help the US tech giant to reach millions of masses and can easily launch its new digital services since Ambani is considered to be highly influential in government circles.
I’m Roshan, a journalist, blogger and music lover. I like covering global news related to finance, business, and technology. Focusing on the collection of true and reliable information, I rely on working by conducting interviews with business leaders and talking to the inside sources of companies.
You can reach out to me at: [email protected]