New York-based private equity firm General Atlantic could end up investing around ₹10,000 crore for a 2% stake in Jio Platforms Ltd, a wholly-owned subsidiary of Reliance Industries Ltd (RIL).
General Atlantic and RIL have been in discussion for a while now, two persons aware of the development confirmed this.
"General Atlantic is considering to put in around $1.3 billion in Jio Platforms and the decision may be taken very soon. It will be one of the largest investments by General Atlantic across emerging markets. The deal may happen at a marginal premium of around 10% to the recently fetched valuations of Jio," said the first person, adding that the transaction may give General Atlantic 2.1-2.2% stake in Jio Platforms.
Jio Platforms has recently attracted significant investments in a quick succession from a clutch of global players such as Facebook Inc., Silver Lake Partners and Vista Equity Partners.
RIL’s stake sale talks in Jio Platforms over the past few months has propelled the oil-and-gas major’s stock by around 39% to ₹1595 since 15 April, making RIL the world’s fourth largest oil and gas firm.
If consummated, the General Atlantic investment in Jio Platforms will result in a total stake sale of around 15% by RIL in less than a month’s time, which will help the conglomerate keep up with its target to become net debt-free by March 2021. RIL had a net debt of Rs1.53 trillion at the group level as on 31 December. The debt has surged in the past few years especially due to Reliance Jio Infocomm's aggressive expansion drive.
Jio Platforms hosts all of RIL’s digital initiatives including Jio digital services (mobile, broadband), apps, tech capabilities (Artificial Intelligence, Big Data, IoT etc.) and investments (like Den Networks, Hathway Cable and Datacom Ltd etc.)
RIL’s 9.99% stake sale to Facebook in Jio Platforms in April valued the latter at Rs.4.62 trillion, which marked the world’s largest investment for a minority stake by a technology company, and the largest foreign direct investment (FDI) in the technology space in India. Then, last week RIL announced to sell a total of around 4% in Jio Platforms to Silver Lake Partners and Vista Equity Partners for about $2.25 billion, which raised Jio’s valuation to around Rs. 4.91 trillion.
The recent deals and partnerships of Jio Platforms will help the company gain more ability to compete with marquee global e-commerce and digital payments behemoths such as Alphabet, Tencent, Alibaba and so on, all of whom have already entered India’s vast, untapped open internet market.
On Monday, Bloomberg reported that the Saudi sovereign wealth fund and General Atlantic are among firms exploring investments in billionaire Mukesh Ambani’s digital business, as Asia’s richest man seeks to expand his operations outside oil and petrochemicals.
“Saudi Arabia’s $320 billion Public Investment Fund is considering buying a minority stake in Reliance Industries Ltd.’s Jio Platforms unit," said the Bloomberg report, citing people, who asked not to be identified as the information is private.