Reliance Industries on Friday announced the sale of 2.32 per cent stake in its digital unit to US-based Vista Equity Partners for Rs 113.67 billion ($1.5 billion), the third deal in a little over two weeks that will inject a combined Rs 605.96 billion in the oil-to-telecom conglomerate to help it pare debt.
The US-based private equity firm will buy a stake in Jio Platforms, which houses the country’s youngest but biggest telecom firm Jio, at an equity value of Rs 49.1 million and an enterprise value of Rs 51.6 million.
“Vista’s investment will translate into a 2.32 per cent equity stake on a fully diluted basis, making Vista the largest investor in Jio Platforms behind Reliance Industries and Facebook,” the company said in a statement.
The deal follows Facebook picking up a 9.99 per cent stake in Jio Platforms on April 22 for Rs 435.74 billion. Within days of that deal, Silver Lake – the world’s largest tech investor – bought a 1.15 per cent stake in Jio Platforms for Rs 56.65 billion.
Vista co-founder Brian Sheth is half-Indian and his father hails from Gujarat. Reliance owner and richest Indian Mukesh Ambani, who also comes from Gujarat, is said to have personal connections with the private equity firm’s founder Robert Smith.
“In Robert and Brian, whose family hails from Gujarat, I found two outstanding global technology leaders who believe in India and the transformative potential of a Digital Indian Society,” Ambani said.
The discussions were led by Ambani’s close aide Manoj Modi and Sheth.
Strategic and financial investors are to form 20 per cent of Jio Platforms. Between the three deals, Reliance has sold 13.46 per cent of Jio Platforms and more such investments are likely in near future.
Ambani, 63, chairman and managing director of Reliance, had in August last year set a target of March 2021, to make his conglomerate net debt-free. But thanks to the Facebook deal, a Rs 531.25 billion rights issue, Silver Lake and Vista Equity investments, and more stake sale to companies such as Saudi Aramco, the target is likely to be achieved by December.
At the end of March quarter, Reliance had an outstanding debt of Rs 3.3 trillion and cash in hand of Rs 1.75 trillion. After adjusting cash, the net debt came to Rs 1.61 trillion.
Jio Platforms, a wholly-owned subsidiary of Reliance Industries Ltd, is a next-generation technology company. Reliance Jio Infocomm Ltd, with 388 million mobile subscribers, will continue to be a wholly-owned subsidiary of Jio Platforms.
Vista, a leading global investment firm, has more than $57 billion in cumulative capital commitments and its global network of companies collectively represents the 5th largest enterprise software company in the world.
Commenting on the investment, Smith, founder, chairman and CEO of Vista, said: “We believe in the potential of the digital society that Jio is building for India. Mukesh’s vision as a global pioneer, alongside Jio’s world-class leadership team, have built a platform to scale and advance the data revolution it started.
“We are thrilled to join Jio Platforms to deliver exponential growth in connectivity across India, providing modern consumer, small business and enterprise software to fuel the future of one of the world’s fastest-growing digital economies.”
The transaction is subject to regulatory and other customary approvals.
