A study on Mukesh Ambani’s Reliance Jio Stake Deals and Right Issue: While everyone was forced to work from home during the recent pandemic, digital ecosystem transformation proves to be the need of the hour! This also caused malls and bigger retailer shops to close their premises. On the contrary, small grocery stores, vegetable and fruit vendors in India started getting more business. Simultaneously, the recent launch of JioMart, an online grocery service platform in India targets to disrupt the markets of its rivals – Amazon’s local unit and Walmart Inc’s Flipkart.
This explains the deluge of money invested into Reliance Jio Platforms in recent times. JioMart has already started delivering grocery across 200 cities all over India including Delhi, Chennai, Mumbai, Ahmedabad, Bengaluru, and Pune. Reliance locked 11 mega deals just in 2 months from Facebook, Silver Lake, Vista Equity Partners, General Atlantic, KKR, Mubadala, Abu Dhabi Investment Authority (ADIA), TPG Capital, L Catterton and Saudi Arabia’s Public Investment Fund (PIF) which comes to 24.70% stake total.
These deals have made Reliance, a net “debt-free” entity as he promised his shareholders last year and now this billionaire is in the top ten list of Forbes Magazine. Moreover, the Reliance Industries stocks is currently trading at its all-time high price and the analysts are expecting even more upsurge in the share price.
Today, in this post, we are going to discuss how these investments were planned smartly by India’s richest man, Mr. Mukesh Ambani, and what does he aim at. We’ll look into the different Reliance Jio stake deals and the ‘right issues’ from different investors all around the world.
Table of Contents
Making RIL Net Debt-Free: Reliance Jio Stake Deals
While looking into the Reliance Jio Stake Deals, it may appear that Dollars were heavily flooding into Jio from different investors. The latest investment in Jio has now made the total fund-raising amount by Reliance to Rs. 1,15,694.33 crore with a total stake of 24.70%. If we add money raised through Rights-Issue, the total comes to Rs. 1,68,818.63 crore which is indeed a lockdown achievement by the richest man of India. Name of CompanyAmount invested in Rs.Ê In Crore% of Stake Acquired Facebook43,574.009.99 Silver Lake10,202.552.08 Vista Equity Partners11,367.002.32 The General Atlantic6,598.381.34 KKR11,367.002.32 Mubadala Investment & Co.9,093.601.85 Abu Dhabi Investment Authority (ADIA)5,683.501.16 TPG Capital4,546.800.93 L Catterrton1,894.500.39 Public Investment Fud (PIF), Saudi Arabia11,367.002.32 Total1,15,694.3324.7
— The Facebook – Jio Deal
Facebook bought a 9.99% stake that values at Rs. 43,574 crores in Jio Platforms – a wholly-owned subsidiary of Reliance Industries Limited. According to Facebook’s CEO Mark Zuckerberg, the deal aims to enable the platform to expand to products and technology in India that he plans to do all over the world. He also added that one of the goals is to provide a better shopping and commerce experience in India through WhatsApp’s communication and payments medium.
Further, his focus is to provide small businesses a lasting presence on Facebook, WhatsApp and Instagram which is also supported by billionaire Mukesh Ambani’s statement that suggests that he targets to use WhatsApp for delivery of the goods from local grocery stores to consumers.
According to this transaction, Jio Platform’s valuation comes to Rs. 4.62 lakh crore. Although Facebook is going to get its seat on Jio Platform’s board, WhatsApp and Jio are going to continue operating as separate entities.
— The Silver Lake – Jio Deal
An American Private Equity firm, one of the largest technology investors in the world, Silver Lake invested Rs. 5,655.75 crores which is almost 1.15% stake in Reliance Industries that comprises Jio Infocomm, its music and video streaming apps too. The deal causes Jio’s valuation to stand at Rs. 4.9 lakh crores approximately leading to extirpate Rs. 1.62 lakh crores of its net debt in the coming months.
Recently, on Friday, 5th June 2020 Reliance announced an additional Rs. 4,546.8 crore investment by Silver Lake for 0.93% additional stake in RIL’s digital unit. This makes the total investment by Silver Lake for the total amount of Rs. 10,202.55 crore.
The valuation comes to Rs. 4.91 lakh crore of Jio Platform and the enterprise value stands at Rs. 5.16 lakh crore for Silver Lake’s investment that makes it a 2.08% total equity stake in Jio Platforms that is purely on a diluted basis. Mukesh Ambani calls ‘it is a strong endorsement of intrinsic resilience of the Indian economy that will surely grow bigger with comprehensive digital enablement.’
— The Vista Equity Partners – Jio Deal
One more American Private Equity and Venture Capital firm funded Jio Platforms 2.32% stake (approx. Rs. 11,367 crores) that sights to transform the Indian digital ecosystem and to deliver expanding boom in connectivity, giving the customers and small businesses to lead to the fastest growing digital economy.
This investment values the Jio Platform at the same amount as Silver Lake’s investment valued. Mukesh Ambani is very hopeful with regards to this deal being the largest investment of all the recent deals after RIL and Facebook, he believes this Private Equity firm will enable them to bring the transformative power of technology to build a digitally sound society in India.
— The General Atlantic – Jio Deal
One of the most leading global growth equity firm, General Atlantic also invested 1.34% stake which is worth Rs. 6,598.38 crores in Jio Platforms. This deal also aimed to leverage Global Atlantic’s global expertise and strategic insights of technology for the benefit of Jio.
Once again, the Jio Platform’s valuation is the same for this investment as it was for Silver Lake’s investment and the Vista Equity Partner’s investment. Reliance Jio Infocomm operates majorly in telecom business with over 388 million users. It also covers digital properties such as Jio Saavn, Haaptik and Jio Cinema.
— RIL Rights Issue
The company also proposed to raise additional capital of Rs. 53,125 crore through rights issue in which the existing stakeholders will be given an opportunity to subscribe to these shares in proportion to their existing holdings. Reliance’s rights offering has been counted as the world’s largest being a non-financial company in the past 10 years and raised about $7 billion targeting to reduce the net debt to zero. The partly paid up rights shares are going to be listed on 15th June, 2020 with an estimated premium of 5-7%.
— The KKR – Jio Deal
An American global investment firm, KKR & Co. Inc., announced recently to buy 2.32% stake in Jio Platforms. This deal once again focuses on digital transformation of ecosystem in India and worldwide. This deal too values Jio Platforms the same as previous investors. The Co-Founder of KKR praises Jio Platform’s ability and potential to transform country’s digital ecosystem.
— The Mubadala – Jio Deal
Abu Dhabi based sovereign firm, Mubadala Investment Co., announced on 5th June 2020 to invest 1.85% stake in Jio Platforms for Rs. 9,093.60 crore. This deal once again focuses on the digital transformation of ecosystem in India and worldwide.
The valuation of Jio Platforms for this investment too is the same – equity value of Rs. 4.91 lakh crore and enterprise value of 5.16 lakh crore. First Oil then Telecom and now heading to capture the e-Commerce market, Mr. Mukesh Ambani indeed proves to be a person with great wisdom.
— The ADIA – Jio Deal
Abu Dhabi Investment Authority (ADIA), has given a cheque for Jio Platforms last week on 7th June 2020 to invest 1.16% stake for Rs. 5,683.50 crore. This deal aims to generate growth opportunities in India that will enable India to take digital leadership.
The valuation of Jio Platforms for this investment too is the same – equity value of Rs. 4.91 lakh crore and enterprise value of 5.16 lakh crore. With this investment, Mukesh Ambani had managed to raise Rs. 97,885.65 crore from seven firms with total stake stands at 21.06% that too albeit COVID-19 situations and lockdown phases. This certainly leads Reliance to reach to a zero net debt position.
— The TPG – Jio Deal
America’s Global Private Equity Firm, TPG Capital has announced to invest in Jio Platforms on Saturday 13th June 2020 0.93% stake for Rs. 4,546.80 crore. The investor aims to become a part of a group that captures one of the largest portions of internet market in the world.
The valuation of Jio Platforms for this investment too is the same. The investments now total Rs. 1,02,432.45 crore that reaches makes it 21.99% stake.
— The L Catterton – Jio Deal
Another Private Equity firm, L Catterton also announced to acquire in Jio Platforms on Saturday 13th June 2020 0.39% stake for Rs. 1,894.50 crore. L Catterton joins hands with Jio Platforms to support the long term goal of making India a leading digital society.
The valuation of Jio Platforms for this investment too is the same. This latest investment has now made the total fund-raising amount by Reliance to Rs. 1,04,326.65 crore with the total stake of 22.38%.
— The KSA’s Public Investment Fund – Jio Deal
Another sovereign wealth fund, Public Investment Fund (PIF) of Saudi Arabia, announced to acquire in Jio Platforms on Thursday 18th June 2020, 2.32% stake for Rs. 11,367 crore.
This tenth investor and its deal has made the RIL the net debt-free as Mr. Mukesh Ambani promised his shareholders last year in August. He truly aims to soar into the sky as an energy-led empire has started its move towards making the company a technology-led global player. The valuation of Jio Platforms for this investment too is the same.
In The Pursuit of Building Large Digital Ecosystem
Reliance Industries, India’s highest valued company, acquired more than nine startups in the past few years. These startups are dealing in different sectors, for example, EasyGov is a citizen service firm while C-square Info Solutions is into pharma software solutions. Similarly, Grab a Grub Services deals with logistics whereas Reverie Language Technologies is an end-to-end voice technology startup.
Clearly, these startups play a crucial role in the company’s quest to become the leading tech player and JioGenNext is the medium that connects startups and Jio Ecosystem. One more step towards the digital transformation that was taken when Reliance Jio Infocomm Limited, a subsidiary of RIL and Microsoft Corporation joined hands in 2019. The purpose of this deal was to increase the adoption of leading technologies such as Artificial Intelligence, Data Analytics, Blockchain, Internet of Things, Cognitive Services and Edge Computing.
Later in 2020, when more than $23 billion was raised by some of those biggest private equity firms the above goals are clearly justified. Mukesh Ambani also suggested in one of his talks that his company’s long-term aim is to make Indian businesses globally competitive and accelerate the digital ecosystem of India by way of adopting new technologies and innovative ideas among small and medium businesses.
AtmaNirbhar Bharat– A Bonanza for Reliance Industries
In our Prime Minister’s latest speech to the general public, the PM Modi announced the concept of ‘Atma Nirbhar Bharat Abhiyan’ that emphasizes on the development of local businesses in India and globally by creating India more self-dependent post COVID scenario. With this mission, the honorable PM suggested encouraging more and more local businesses and service providers by way of utilizing their services even more.
Mr. Mukesh Ambani too sets his goal to make small Indian businesses more self-reliant and competitive by way of introducing the latest technologies and tying up with startups and attracting more foreign investments. This Abhiyan and his goal are quite similar where the underlying idea is to create a platform to foster the expansion of small and medium local businesses.
It is gratuitous to mention that despite several uncertainties had been featured throughout COVID situations, the mastermind has taken this opportunity to not solely grow his business but also allow the native suppliers and service providers to perform at the world level to become more competitive. Mark Zuckerberg conjointly mentioned once he proclaimed Facebook-Jio deal that ‘company’s robust financial position proved to be an “important asset” that permits it to aim to a long-term growth priority in India even within the thick of a troubled world economy’.
Mukesh Ambani calls it a vote of confidence not only in his company but also in the intrinsic strength of the Indian economy both by domestic and foreign investors.