Reliance Industries surprised the D-Street with the Facebook deal worth $5.7 billion. On Monday, the company, which is committed to attaining zero-debt status by 2021, announced another mega-deal with Silver Lake.
“The Silver Lake news coming right after the Rights Issue and the Facebook deal is indicative of the fact that there is a lot of interest from global players to participate in the digital growth story and people will jump the fence,” Prakash Diwan of Altamount Capital Management said in an interview with CNBC-Tv18.
“After the Facebook deal, nobody thought that the re-rating could happen in 4 days. It has given tremendous confidence to shareholders of RIL. Silver Lake is an active PE player and has investments in Airbnb, Expedia, and Twitter, etc.,” he said.
“The investments are all top of the line marquee names they (Silver Lake) has invested in, which suggests that the Jio Platform has now become a Facebook story as well,” added Diwan.
Reliance Industries and Jio Platforms Limited announced that Silver Lake will invest Rs 5,655.75 crore into Jio Platforms.
This investment values Jio Platforms at an equity value of Rs 4.90 lakh crore and an enterprise value of Rs 5.15 lakh crore and represents a 12.5 percent premium to the equity valuation of the Facebook investment announced on April 22, 2020.
Share of RIL which has rallied by over 40 percent so far in 2020 could remain rangebound till the right issue is over, explains Diwan.
The re-rating of the stock beyond the Facebook, and Silver Lake deal as well as Debt reduction will come from any positive news from Saudi Aramco deal – till then there could be some profit booking pressure, explains Diwan.
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