Grapevine: Facebook eyes Jio stake; Future group puts insurance venture on block
Photo Credit: Reuters

Facebook is close to signing a multibillion-dollar deal for a 10% stake in heavily-indebted Reliance Jio, which boasts the acquisition of 370 million users in just three years, two people with knowledge of the discussions told Financial Times.

But the talks have been halted by the global lockdowns caused by the coronavirus outbreak, one of the persons said. A deal with Facebook was due to be announced later this month, coinciding with the end of the Indian financial year.

The report quoted analysts at Bernstein Research, who valued Jio at more than $60 billion (Rs 4,57,860 crore at current exchange rate). 

Previously, Google held separate talks with Reliance Jio on stake sale, the report added. Last year, Microsoft announced plans to partner with Jio to offer cloud computing to businesses.

Reliance Industries Ltd’s debt burden has swelled as it has aggressively expanded Jio, and the deal would form a part of its plans to cut net debt to zero by March 2021. 

In an attempt to reduce its debt pile, Reliance has sought to sell off stakes, including 20% of its refining unit to Saudi Aramco, and a $3.3 billion investment by Brookfield in its tower business.

Reliance announced last year that it would separate Jio out into a new company and attract new investors ahead of an eventual listing.

Separately, the Future group is looking for a buyer for its insurance venture amid margin calls from banks to speed up the sale, bankers in the know told Business Standard.

The group has to pay debts of Rs 316 crore and Rs 729 crore in 2020-21 and 2021-22, respectively. 

The value of pledged shares fell by half from Rs 8,100 crore a year ago to Rs 3,868 crore now.

Last week, ratings firm Icra downgraded the group’s holding firm to junk status citing high debt of its promoter entities. 

The group has sold many assets to reduce its debt, including stake to Amazon. Its external debt reduced to Rs 1,430 crore as of 31 December 2019. 

The total debt at the group’s listed firms bumped up to Rs 12,778 crore as of 30 September 2019 from Rs 10,951 crore as of 31 March 2019.

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