KKR To Invest Rs 11,367 Crore In Jio Platforms
KKR & Co. will invest Rs 11,367 crore in Jio Platforms Ltd., the fifth investor to bet on Reliance Industries Ltd.’s telecom and technology asset in a month, boosting the efforts of Asia’s richest man to cut debt at his conglomerate.
The global private equity firm will subscribe to fresh shares equivalent to a 2.32 percent stake in the subsidiary of India’s most-valued company, according to an exchange filing, pegging the unit’s equity value at Rs 4.91 lakh crore.
The valuations are similar to at which Facebook Inc, private equity firms Silver Lake and Vista Equity Partners and growth equity firm General Atlantic invested in Jio Platforms, controlled by Mukesh Ambani.
After the transactions are completed, Reliance Industries will own an 82.9 percent stake in Jio Platforms, while other investors will have 17.1 percent. Reliance Industries has so far raised close to Rs 78,562 crore from the five investors.
The parent had earlier announced plans to restructure its telecom and digital business by consolidating the ownership of its platform apps/AI/cloud initiatives into a separate 100 percent subsidiary, Jio Platforms. The entity also owns the mobile telecom and broadband business.
The restructuring was aimed at housing the digital assets within a debt-free entity and making it comparable with global platforms such as Alphabet Inc., Tencent Holdings Ltd. and Alibaba Group Holding Ltd., among others.
These investments in Jio Platforms, along with the rights issue, will lower Reliance Industries’ consolidated net debt by 82 percent compared to FY20 debt. The company’s net debt stood at Rs 161,035 crore as of March 2020 and the owner of the world’s largest crude oil refinery aims to bring this to zero by the end of 2020-21.
Mukesh Ambani has been spending billions of dollars to shape his online retail and telecom businesses in India. His conglomerate has also been increasingly reliant on the newer consumer units over the past few quarters to hold up its earnings when the legacy businesses face pressure. The newer businesses, including telecommunications and retail, are likely to contribute 50 percent of RIL’s earnings in a few years from about 32 percent now, Ambani had said during the company 42nd annual general meeting in August.