Energy-to-telecom conglomerate Reliance Industries Ltd said on Monday private equity firm Silver Lake will invest Rs 5,655.75 crore ($747 million) in its digital arm Jio Platforms Ltd.
The deal values Jio Platforms at Rs 4.9 trillion, Reliance said in a statement. The investment represents a 12.5% premium to the equity valuation of the Facebook investment announced on April 22, the Indian company said.
Facebook had agreed to invest Rs 43,574 crore ($5.7 billion) to buy a 9.99% stake in Jio Platforms.
Jio Platforms is RIL’s digital services arm that houses its telecom unit, Reliance Jio Infocomm Ltd, as well as its news, movie and music apps.
Egon Durban, Silver Lake co-CEO and managing partner, said that the market potential of Jio Platforms is enormous and that it had brought low-cost digital services to consumers and small businesses.
SilverLake is invested in some of the world’s best-known technology firms such as Twitter, Airbnb, Alibaba Group, Ant Financial, Didi Chuxing and Motorola Solutions. Menlo Park-based Silver Lake also helped take Dell Technologies private in 2013 and was invested in Skype before Microsoft acquired the video communications company in 2011.
Reliance Industries chairman and managing director Mukesh Ambani said Silver Lake’s investment would help the company use insights from the PE firms “global technology relationships”.
Reliance Industries had created Jio Platforms late last year to house all its digital business while absorbing the entire $13.5-billion debt of its telecom business, Reliance Jio Infocomm.
This was seen as a precursor to monetise the telecom business that requires more capital investments to move to a next-generation ecosystem.
Previously, Reliance had spliced out its telecom infrastructure assets including towers and roped in Canadian investor Brookfield to seal the biggest private equity deal ever in India worth some $3.7 billion.
Reliance also plans to sell a 20% stake in its oil-to-chemicals business to Saudi Aramco for around $15 billion. This deal is yet to close amidst the ongoing coronavirus pandemic.
These stake sales are part of Reliance Industries’ plan to reduce its net debt to zero by March 2021. Reliance also said last week that it was going for a rights issue — its first in three decades — to raise Rs 53,000 crores from existing investors.
For Silver Lake’s investment, Morgan Stanley acted as the financial adviser to Reliance Industries. AZB & Partners and Davis Polk & Wardwell acted as legal counsels.