BackRIL shares jump 8% as Facebook picks up stake in subsidiary
The investment by Facebook values Jio Platforms at ₹4.62 lakh crore pre-money, enterprise valueMorgan Stanley as financial advisor and AZB & Partners and Davis Polk & Wardwell as counsels advised on the transaction
PremiumNEW DELHI: Shares of Reliance Industries Ltd (RIL) jumped 8.3% in early deals on Wednesday after the company announced a stake sale of its digital business to Facebook Inc. At 10:21 am, shares of Reliance Industries traded at ₹1,318.15, up 6.64% on the BSE.
Facebook will buy 9.99% equity stake in Jio Platform, a wholly-owned subsidiary of Reliance Industries Limited, on a fully diluted basis. “Reliance Industries Limited, Jio Platforms Limited and Facebook, Inc today announced the signing of binding agreements for an investment of ₹43,574 crore by Facebook into Jio Platforms. This investment by Facebook values Jio Platforms at ₹4.62 lakh crore pre-money enterprise value ($65.95 billion, assuming a conversion rate of ₹70 to a US dollar," said a statement from RIL.
Concurrent with the investment, Jio Platforms, Reliance Retail Limited and WhatsApp have also entered into a commercial partnership agreement to accelerate Reliance Retail's JioMart platform by connecting nearby 'kirana' shops to customers, enabling home delivery over Jio's mobile interface.
“The companies will work closely to ensure that consumers are able to access the nearest kiranas who can provide products and services to their homes by transacting seamlessly with JioMart using WhatsApp," it said.
Morgan Stanley as financial advisor and AZB & Partners and Davis Polk & Wardwell as counsels advised on the transaction.
In a 13 April report, Goldman Sachs had said investor queries highlight their concerns around RIL’s balance sheet free cash flow and debt adding that leverage has already been declining and will likely continue to come down in FY21 as well. “The complexity of RIL’s energy assets together with strong consumer earnings momentum should limit the degree of sequential decline in earnings and drive sharp turnaround in second half of FY21," the global brokerage firm had said.
It expects overall EBITDA of Reliance Industries to have declined 8% quarter-on-quarter in Q4 FY20 while petchem earnings are seen flattish as margins had reached the trough in Q3 FY20. “We expect a steeper decline in refining due to inventory loss which will be partly offset by growth in telecom earnings," it said.
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