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Saudi Arabia's PIF to invest Rs 11,367 crore in Jio Platforms
Mumbai, June 19, 2020
Energy, petrochemicals, telecom and retail giant Reliance Industries Limited (RIL) today said it had become net debt-free after raising Rs 168,818 crore in just 58 days through a series of investments totalling Rs 115,693 crore by global tech investors in its subsidiary Jio Platforms as well as by raising Rs 53,124.20 crore through its rights issue.
The last of the series of investments was announced by RIL and Jio here yesterday -- an investment of Rs 11,367 crore in Jio Platforms, a digital services platform, by Public Investment Fund (PIF), the sovereign wealth fund of Saudi Arabia.
“I have fulfilled my promise to the shareholders by making Reliance net debt-free much before our original schedule of 31st March 2021," RIL Chairman and Managing Director Mukesh Ambani said in a press release from the company.
"The combined capital raised has no precedence globally in such a short time. Both of these are also unprecedented in Indian corporate history and have set new benchmarks. This is even more remarkable that this was achieved amidst a global lockdown caused by the COVID-19 pandemic.
"Along with the stake sale to BP in the petro-retail JV, the total fund raise is in excess of Rs 1.75 lakh crore," the release said.
"Our net debt was Rs 161,035 crore, as on 31st March 2020. With these investments, RIL has become net debt-free," the release said.
The RIL rights issue, which was subscribed 1.59 times, was not only the largest ever in India, but also the largest in the world by a non-financial entity in the last ten years, it said.
Ambani had told shareholders at RIL's 42nd annual general meeting on August 12, 2019 that the company would become net debt-free before March 31, 2021.
“We have a very clear roadmap to becoming a zero net debt company within the next 18 months that is by 31st March 2021……
"We have received strong interest from strategic and financial investors in our consumer businesses, Jio and Reliance Retail. We will induct leading global partners in these businesses in the next few quarters, and move towards listing of both these companies within the next five years……
"With these initiatives, I have no doubt that your company will have one of the strongest balance sheets in the world," he had said.
Expressing his gratification at this achievement, Ambani stated, “Today I am both delighted and humbled to announce that we have fulfilled our promise to the shareholders by making Reliance net debt-free much before our original schedule of 31st March 2021. Exceeding the expectations of our shareholders and all other stakeholders, again and yet again, is in the very DNA of Reliance. Therefore, on the proud occasion of becoming a net debt-free company, I wish to assure them that Reliance in its Golden Decade will set even more ambitious growth goals, and achieve them, in fulfilment of the vision of our founder, Dhirubhai Ambani, to consistently increase our contribution to India’s prosperity and inclusive development.”
“Over the past few weeks, we have been overwhelmed by the phenomenal interest of the global financial investor community in partnering with Jio. As our fund-raising milestone from financial investors is achieved, we sincerely thank the marquee group of financial partners and warmly welcome them into Jio Platforms. I also express my heartfelt gratitude to all the retail and institutional investors, both domestic and foreign, for their overwhelming participation in our record-setting rights Issue," he added.
Earlier, a press release from RIL and Jio said the PIF investment valued Jio Platforms at an equity value of Rs 4.91 lakh crore and an enterprise value of Rs 5.16 lakh crore. It will translate into a 2.32% equity stake in Jio Platforms on a fully diluted basis.
With this investment, Jio Platforms has raised Rs 115,693.95 crore from leading global investors, including Facebook (Rs 43,573.62 crore, 9.99% stake), Silver Lake Partners (Rs 5,665.75 crore, 1.15%), Vista Equity Partners (Rs 11,367 crore, 2.32%), General Atlantic Rs 6,598 crore, 1.34%), KKR (Rs 11,367 crore, 2.32%), Mubadala (Rs 9,093.60 crore, 1.85%), ADIA (Rs 5,683 crore, 1.15%), TPG (Rs 4,546.80 crore, 0.93%), L Catterton (Rs 1,894.50 crore, 0.39%) and PIF (11,367 crore, 2.32%), since April 2020.
"With the addition of PIF’s investment, Jio Platforms has established partnerships with a marquee set of global financial investors, who will contribute to establishing the Digital Society vision for India," the release said.
Jio Platforms is a next-generation technology company focused on providing high-quality and affordable digital services across India, with more than 388 million subscribers. Jio Platforms has made significant investments across its digital ecosystem, powered by leading technologies spanning broadband connectivity, smart devices, cloud and edge computing, big data analytics, artificial intelligence, Internet of Things, augmented and mixed reality and blockchain.
"Jio Platforms’ vision is to enable a Digital India for 1.3 billion people and businesses across the country, including small merchants, micro-businesses and farmers, so that all of them can enjoy the fruits of inclusive growth," the release said.
PIF is the sovereign wealth fund of Saudi Arabia and as part of its mandate to diversify its economy, has made its largest investment into the Indian economy to-date.
"This investment is in line with PIF’s strategy and mandate of investing in sectors and companies that generate long-term commercial returns to drive Saudi Arabia’s economic transformation as part of Vision 2030 objectives. This investment supports PIF’s mandate of building strong global investment partnerships to further Saudi Arabia’s investment reach and exposure," the release said.
Ambani said, “We at Reliance have enjoyed a long and fruitful relationship with the Kingdom of Saudi Arabia for many decades. From Oil Economy, this relationship is now moving to strengthen India’s New Oil (Data-driven) Economy, as is evident from PIF’s investment into Jio Platforms. I have greatly admired the defining role PIF has played in driving the economic transformation of the Kingdom of Saudi Arabia. I welcome PIF as a valued partner in Jio Platforms and look forward to their sustained support and guidance as we take ambitious steps to accelerate India’s digital transformation for enriching and empowering the lives of 1.3 billion Indians.”
Yasir Al-Rumayyan, Governor of PIF, said: “We are delighted to be investing in an innovative business which is at the forefront of the transformation of the technology sector in India. We believe that the potential of the Indian digital economy is very exciting and that Jio Platforms provides us with an excellent opportunity to gain access to that growth. This investment will also enable us to generate significant long-term commercial returns for the benefit of Saudi Arabia’s economy and our country’s citizens, in line with our mandate to safeguard and grow the national wealth of the Kingdom.”
The transaction is subject to Indian regulatory and other customary approvals, the release said.
Morgan Stanley acted as financial adviser to Reliance Industries and AZB & Partners and Davis Polk & Wardwell acted as legal counsels.