When was the last time you heard Mark Zuckerberg and Sundar Pichai investing billions in the same firm and emerging as the two largest minority shareholders in the target entity?
That enticing proposition became a reality on July 15 at the 43rd — all-virtual — annual general meeting (AGM) of Reliance Industries (RIL). Chairman Mukesh Ambani announced a Rs 33,737 crore investment by Google for a 7.7 percent stake in Jio Platforms, marking the end of a gargantuan, unparalleled fundraising exercise.
This is the first and biggest investment by Google under its India digitisation fund, which was launched earlier this week. The fund is looking to pump in nearly $10 billion in India over the next five to seven years and nearly half of that amount went to Jio.
On April 22, global rival Facebook invested Rs 43,574 crore to pick up a 9.9 percent stake in Jio Platforms, sealing the largest foreign direct investment (FDI) in the Indian tech sector. Nearly half of the famed FAANG (Facebook, Amazon, Apple, Netflix, Google) stocks of the US market have now bet on the RIL subsidiary.
Funding blitzkrieg In less than four months, Jio Platforms has attracted a staggering Rs 152,056 crore from a total of 13 investors by shedding around 33 percent stake. These investors include Silver Lake, Vista, General Atlantic, KKR, Mubadala, ADIA, TPG, L Catterton, PIF, Intel and Qualcomm.
Consequently, Jio Platforms now commands an eye-popping equity valuation of Rs 4.36 lakh crore based on the latest bet by Google, reflecting its standing as a digital powerhouse, and not just a telecom player.
“Look at the valuation and the sheer quality of names — leading strategic investors, blue-chip private equity funds and sovereign wealth funds. What else can one ask for? Some of the investors may look to exit post listing. Going forward, timing the IPO based on market conditions will be crucial,” said a capital market deals advisor on condition of anonymity.
In the past, RIL has indicated plans to list Jio Platforms in the next few years.
The oil-to-telecom conglomerate has raised a combined Rs 212,809 crore through its record Rs 53,000 crore rights Issue, investments in Jio Platforms, and Rs 7,269 crore from an investment by British Petroleum in its fuel retail joint venture. The feat has no parallel in Indian corporate history.
Rs 212, 809 crore! Let that figure sink in. It’s more than one percent of India’s GDP and it was raised by RIL during the coronavirus pandemic, the most disruptive even in modern human history.
The figure far exceeds the net debt of the diversified conglomerate, which stood at Rs 1,61,035 crore at the end of March 31.
The gap would have been wider if unforeseen circumstances in the energy market had not delayed the progress of the Saudi Aramco deal. In August 2019, RIL announced plans to sell a 20 percent stake in its flagship chemicals and refining business to Saudi Aramco in a deal valued at $15 billion. But for now, the biggest takeaway for shareholders is that RIL is truly a zero net debt company, well ahead of Ambani’s initial target of March 2021.
“Our target for capital raise is now complete and we now look forward to only adding strategic partners who share our vision in each of our current and future businesses,” Ambani said during his AGM speech.
Follow all of our coverage on RIL's 43rd annual general meeting here.
One milestone after another Recently, RIL crossed another milestone and became the first domestic firm to cross the Rs 12 lakh crore market capitalisation mark. From the lows of March, the share price has surged more than 100 percent.
According to a report by CNBCTV-18, it is the best performing mega-cap stock and ranks among the only non-American company in the top five best-performing stocks globally.
Market analysts have highlighted the promoter’s investor centric approach and commitment to the debt reduction exercise in a challenging market.
“RIL saw an opportunity in adversity during the lockdown period. Despite the Aramco deal getting delayed, due to the excellent infrastructure of Jio and the firm’s execution capabilities, it managed to raise more than Rs 1,52,000 crore. The record rights issue was an additional cushion and the deferred payment facility and the willingness of the promoters to subscribe to the entire issue before its closure gave confidence to investors,” said market expert SP Tulsian of sptulsian.com.
Disclaimer: Reliance Industries Ltd is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd
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