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Reliance Jio’s striking fundraising binge during tough times

  • Reliance Industry (RIL) has raised over USD 13 billion so far in 2020
  • Shares of RIL reached a new high making it India’s most valued company

 

When every business across the globe is facing heat of coronavirus outbreak, Reliance Industry seems unstoppable to reach its goal to become debt-free ahead of March 2021.  RIL’s subsidiary, Jio Platform Limited has attracted over USD 13 billion (INR 1 lakh crore) in equity investments apart from RL’s own fund raised through right issue and investment from BP deal.

This fundraising binge started when Facebook announced about investing USD ~5.7 billion (INR 43,574 crore) in Reliance’s Jio Platform for a 9.99% stake in the company on 21st April 2020 (read our previous blog here). Till date, RIL has added many marquee equity investors in its fundraising list, making a historic 10th deal on 13th June 2020. While COVID-19 pandemic has cast its shadow on near term outlook of global economy, these deals have made RIL centre of attention which has so far raised USD ~13.73 billion (INR 104,326.95 crore) within less than 8 weeks’ time marking it the largest continued and uninterrupted fundraising by any company worldwide.

Deal rush

                               Source: Televisory Research

*1 USD = INR 76

The latest deal was announced on 13th June wherein Jio added TPG and L Catterton to its equity investors list by selling total 22.38% equity stake in Jio till date. Before that, RIL has raised funds for its Jio Platforms from global names including Silver Lake, Vista Equity Partners, General Atlantic, KKR, Mubadala (Abu Dhabi-based sovereign investor), and Abu Dhabi Investment Authority (ADIA). While Facebook acquired the largest pie of Jio with its 9.99% equity stake, Vista, KKR and Silver lake got over 2% equity stake each in Jio. This fund-raising spree has brought Jio Platforms valuation at over USD ~64.6 billion (INR 4.91 lakh crore) and the combine enterprise valuation at over USD ~67.9 billion (INR 5.16 lakh crore).

These deals underline the status of Jio Platforms as India’s biggest telecom player and a tech powerhouse which has ~ 387.5 million subscribers in a very short time span since its launch in late 2016 that is bolstering its ability to dominate the country’s thriving digital economy. These foreign equity investments are rushing towards Jio amidst growing attraction for India’s vast digital consumer market. Meanwhile, Jio also has made significant progress around its digital ecosystem by bringing on leading technologies, from broadband to smart devices, big data analytics, cloud technology, AI, IoT, blockchain and many more to become investor’s favourite in this space. Moreover, as increasing number of people were putting up at home due to countrywide lockdown and increasing work from home requirements amidst the Covid-19 pandemic, Jio would be one amongst the few businesses that would benefit from increased data usages in the country.

On track to become debt free

All these stake sales are part of RIL’s well known plans to be debt free by March 2021. RIL has been seeking strategic partnership across all its business lines while also targeting to deleverage its balance sheet.

At the end of Q4 2020, RIL has an outstanding debt of USD ~44.25 billion (INR 3,36,294 crore) along with cash-in-hand of USD ~23.06 billion (INR 1,75,259 crore). This brings the net debt position to USD ~21.19 billion (INR 1,61,035 crore). With these continuous deals of stake sales, RIL’s goal is likely to be achieved by December 2020, much ahead of planned timeframe as RIL also raised USD ~6.99 billion (INR 53,125 crore) by way of a 1:15 rights issue which is not only India’s biggest right issue also the first issue by RIL in last 3 decades. Moreover, it has also sold half of its fuel retail venture to BP Plc for USD ~0.92 billion (INR 7,000 crore).

 

Meanwhile RIL’s stock price reached to a new high, making it the most valued company of India with market capitalization crossing USD ~131.58 billion (INR 10 lakh crore). For the year-to-date period, the stock has increased more than 7%, outperforming benchmark index which is hovering in red zone during the same period. It closed at a record high of INR 1,618 on 16th June 2020 after hitting INR 1,648 during day trading.

 

 

RIL’s historic fundraising spree from global investors, during a time when the worldwide economy is in a bad shape due to stagnancy created by COVID-19 pandemic, is showcasing buzz of India’s growing digital economy on global market where vast opportunity is still untapped in the market. The stake sales is likely to further strengthen Jio by providing it with foreign capital and technology insights to become a leader in end-to-end digital ecosystem provider including telecom, advance technology, entertainment, content, e-commerce and more in the coming quarters/years.

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