Reliance Jio secured fifth investment in one month. International investment equity firm KKR(NYSE: KKR) is going to invest Rs. 11,367 crore in Reliance Jio. It makes up 2.32 percent stake in Jio. “This transaction values Jio Platforms at an equity value of Rs4.91 lakh crore and an enterprise value of Rs5.16 lakh crore. This is KKR’s largest investment in Asia and will translate into a 2.32 percent equity stake in Jio Platforms on a fully diluted basis,” said Reliance.
From the recent investment by KKR in Jio will receive combine 78,652 crore. In the past month, Jio has sold over 17% of its stake to foreign investors. The new investment will help Mukesh Ambani MD & chairman of Reliance to get closer to the promise that he had committed to its investors to make Reliance industries debt-free by the year 2021. In the year-end Reliance’s debt stood at 1.61 lakh crore. After investment by Facebook, several companies have shown interest in purchasing a stake in Jio. The company also announced the biggest right issue last three decades.
Mukesh Ambani, chairman and MD, RIL, said, “We are looking forward to leveraging KKR’s global platform, industry knowledge and operational expertise to further grow Jio.”
Henry Kravis, co-founder and co-CEO of KKR, said, “We view this landmark investment as a strong indicator of KKR’s commitment to supporting leading technology companies in India and the Asia Pacific.”
Since inception, KKR has invested over $30 billion (total enterprise value) in tech companies, and today, its technology portfolio has over 20 companies across the technology, media and telecom sectors. In addition, India has been a key strategic market for KKR with a history of investing in the country since 2006, it said.
The KKR deal is at the same valuation as the last announced 17 May transaction where General Atlantic paid Rs 6,598 crore for a 1.34% stake. RIL share closed at Rs 1,440.05 on Thursday, up 0.4% from the previous day’s close.
“KKR shares our ambitious goal of building a premier Digital Society in India. KKR has a proven track record of being a valuable partner to industry-leading franchises and has been committed to India for many years,” RIL chairman Mukesh Ambani said in the statement. “We are looking forward to leveraging KKR’s global platform, industry knowledge, and operational expertise to further grow Jio.”
“Few companies have the potential to transform a country’s digital ecosystem in the way that Jio Platforms is doing in India, and potentially worldwide. Jio Platforms is a true home-grown next-generation technology leader in India that is unmatched in its ability to deliver technology solutions and services to a country that is experiencing a digital revolution,” Henry Kravis, co-founder and co-chief executive of KKR, said in a statement. “We are investing behind Jio Platforms’ impressive momentum, world-class innovation and strong leadership team, and we view this landmark investment as a strong indicator of KKR’s commitment to supporting leading technology companies in India and the Asia Pacific,” he added. This is KKR’s largest investment in the Asian market.
With the latest deal, Jio Platforms will get a combined Rs 78,562 crore from the five investments. The RIL unit comprises mostly its telecom business under Reliance Jio Infocomm, which is the largest in the country with more than 388 million subscribers. RIL’s other digital properties and investments such as Jio Cinema, Jio Saavn, and Haaptik are housed in Jio Platforms.
Of the ₹43,574 crore that it will receive from Facebook, Jio plans to use ₹28,000 crore to redeem optionally convertible preference shares (OCPS) of its parent RIL and retain ₹15,000 crore in its books, Jio’s top management had said in a conference call on 22 April.
As part of its plans to be debt-free, RIL is also raising ₹53,215 crore via a rights issue, a process that’s currently underway.
KKR, founded in 1976 by Kravis, Kohlberg, and Roberts, is one of the largest private equity companies in the world. It is an investor in Bytedance, the company behind TikTok, a popular short video-sharing platform. KKR has a big presence in India and has been investing here since 2006.
General Atlantic said it would buy a 1.34 percent stake in Jio Platforms for Rs6,598.38 crore on May 18, while Vista Equity Partners said it would get a 2.32 percent stake in the Rs11,367 crore on May 8. Before that, US private value firm Silver Lake said it would put Rs5,655.75 crore for a 1.15 percent stake in Jio Platforms, and on April 22, Facebook said it would contribute $5.7 billion to a 9.99 percent stake in the company.
Other global companies that have purchased stakes in Jio in recent weeks are Facebook, Silver Lake, Vista, and General Atlantic. Reliance is also looking to sell a 20% stake to Saudi Aramco in its oil business.