In its third such deal in as many weeks, Reliance Industries-owned Jio Platforms said Vista Equity Partners will invest Rs 11,367 crore in the company. The investment, which values Jio Platforms at an equity value of Rs 4.91 lakh crore and an enterprise value of Rs 5.16 lakh crore will give the private equity firm a 2.32 per cent stake in the unit, which primarily houses Reliance’s telecom company Jio and its digital ecosystem, including broadband connectivity, smart devices, cloud computing, internet of things and blockchain.
The announcement sent RIL shares up 3.5 per cent to Rs 1,559.55 on Friday morning, compared with the wider BSE Sensex, which was up 1.5 per cent.
Jio, which began operations in 2016, is India’s largest telecom player with 388 million subscribers. The third major investment Jio Platforms has secured will only help it strengthen its leadership at a time rivals like Bharti Airtel and Vodafone Idea are facing severe headwinds after the Supreme Court ruled in favour of the government in the matter related to huge adjusted gross revenue (AGR) dues last year.
On April 22, social networking giant Facebook had announced $5.7 billion (Rs 43,574 crore) investment to pick up a 9.99 per cent stake in Jio Platforms. On May 4, another private equity firm Silver Lake said it would pump Rs 5,656 crore in Jio Platforms for a 1.15 per cent stake. With the Vista Equity Partners deal, it has now raised Rs 60,596.37 crore in three weeks.
“We believe in the potential of the digital society that Jio is building for India. Mukesh (Ambani)’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,” said Robert Smith, founder and CEO of Vista Equity Partners.
The PE firm focuses on enterprise software, data and technology-enabled companies. It has over $57 billion in cumulative capital commitments and its current portfolio companies include Accelya, Alegeus, Finastra and Greenway Health, among others.
“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,” added Smith.
Mukesh Ambani, the chairman of Reliance Industries, said, “We are excited to leverage the professional expertise and multi-level support that Vista has been offering to its investments globally for the benefit of Jio.”
The investments in Jio Platforms come at a time RIL's traditional oil and gas and refining businesses are under pressure after a record crash in crude oil prices as demand fell in the wake of the COVID-19 pandemic and subsequent lockdowns across many countries.
Reliance had announced plans to become net debt free by March 2021. These investments in Jio Platforms, apart from its fuel retailing joint venture with British energy giant BP and the planned 20 per cent stake sale in its refining and petrochemicals business to Saudi Aramco will help it take big steps in that direction.
RIL has also announced plans to raise Rs 53,125 crore via India’s biggest rights issue.
At the end of March, RIL’s gross debt stood at Rs 336,294 crore, while net debt was at Rs 161,035 crore. “RIL is moving quickly to realise its plan of becoming net debt free by end-FY21,” said Swarnendu Bhushan, research analyst at Motilal Oswal Financial Services in a recent note.
The analyst noted that Jio has shown consistent EBITDA (earnings before interest, taxes, depreciation and amortisation) growth, reaching the dominant No 1 position by revenues in less than four years of launch. He was upbeat on its multiple monetisation avenues coming from increasing long-term ARPUs (average revenue per user) and other digital applications.
