Abu Dhabi’s Mubadala To Invest Rs 9,094 Crore In Jio Platforms
Mubadala will subscribe to fresh shares equivalent to a 1.85% stake in Jio Platforms.
Mubadala Investment Co. will invest Rs 9,094 crore in Jio Platforms Ltd., the sixth investor in less than two months to bet on Reliance Industries Ltd.’s telecom and digital asset, boosting the efforts of Asia’s richest man to cut debt at his conglomerate.
The sovereign investor managing a global portfolio for the Government of Abu Dhabi will subscribe to fresh shares equivalent to a 1.85% stake in the subsidiary of India’s most valued company, according to a company statement.
The deal with Mubadala—which manages a $229-billion portfolio in five continents with interests in multiple sectors, including aerospace, metals and mining, renewable energy, oil and gas, real estate, and pharmaceuticals, among others—pegs Jio Platforms’ equity value at Rs 4.91 lakh crore.
The valuations are similar to at which Facebook Inc, private equity firms Silver Lake, Vista Equity Partners and KKR & Co. and growth equity firm General Atlantic invested in Jio Platforms, controlled by Mukesh Ambani. Billionaire Ambani is also in talks with Saudi Arabia’s sovereign wealth fund for a potential investment in Jio Platforms, Bloomberg had reported.
Together, these six investors have invested close to Rs 87,655 crore in Jio Platforms. After the transaction, Reliance Industries will own an 81.05% stake in the digital unit, while other investors will hold 18.95%.
Shares of Reliance Industries have surged 28.9% since Facebook’s deal on April 22.
Reliance Industries had earlier announced plans to restructure its telecom and digital business by consolidating the ownership of its platform apps/AI/cloud initiatives into a separate 100% subsidiary, Jio Platforms.
The restructuring was aimed at housing the digital assets within a debt-free entity and making the new entity comparable with global platforms such as Alphabet Inc., Tencent Holdings Ltd. and Alibaba Group Holding Ltd., among others, which are largely debt-free and have created large digital ecosystems.
These investments in Jio Platforms, along with the rights issue, will now lower Reliance Industries’ consolidated net debt by 87% compared to FY20 debt. That will be the lowest since financial year ended March 2006. The world’s largest crude oil refinery aims to bring its debt to zero by the end of 2020-21.
Ambani has been spending billions of dollars to shape his online retail and telecom businesses in India. His conglomerate has also been increasingly reliant on the newer consumer units over the past few quarters to hold up its earnings when the legacy businesses face pressure. The newer businesses, including telecommunications and retail, are likely to contribute 50% of Reliance Industries’ earning in a few years from about 32% now, Ambani had said during the company 42nd annual general meeting in August last year.