In another major vote of confidence for Mukesh Ambani’s digital strategy, Abu Dhabi-based sovereign fund manager Mubadala Investment Company has begun discussions to invest about $1 billion in Reliance Industries Ltd’s digital assets subsidiary Jio Platforms Ltd, said two people aware of the development.
“The talks between RIL and Mubadala Investment have been happening over the past few days. Mubadala is keen to buy a little over 1% in Jio Platforms. The deal is likely to happen at a valuation of close to Rs. 5 trillion, which is similar to what has been estimated by the deals agreed upon between Jio and Silver Lake and Vista Equity Partners,” said the first person.
According to Mubadala, cited in a report by Reuters on Thursday, “Clearly Jio’s platform is attracting a wide range of world-class investors, given its enormous potential to serve one of the world’s largest marketplaces.”
On Thursday, Mint reported that Microsoft Corp. is also negotiating an investment of as much as $2 billion in Jio Platforms.
If the two negotiations cited above go through, the world’s most valuable company Microsoft and Abu Dhabi-based Mubadala will get a slice of Jio Platforms that has already attracted massive investments worth $10 billion in just a month from marquee investors, including Facebook Inc., KKR & Co., Silver Lake, Vista Equity Partners and General Atlantic.
Jio Platforms combines all of Reliance’s digital and telecom initiatives, including Jio digital services (mobile, broadband), apps, tech capabilities (artificial intelligence, Big Data, Internet of Things, etc.,) and other investments such as in Den Networks, Hathway Cable and Datacom Ltd.
All these deals will take RIL closer to its ambition to get free of its net debts of Rs.1.53 trillion (as at the end of December) at the group level. RIL’s debt has surged in the past few years especially due to the aggressive expansion drive of Reliance Jio Infocomm Ltd.
Apart from helping RIL to curb debts, Jio Platforms’ partnership with Facebook coupled with the recent investments committed by the large buyout firms cited above, will help Jio Platforms gain more ability to compete with marquee global e-commerce and digital payments behemoths such as Alphabet, Tencent, Alibaba and so on, all of whom have already entered India’s vast, untapped open internet market.
RIL has traditionally been engaged in oil-and-gas business, something that Ambani inherited from his father Dhirubhai Ambani, who is often considered as one of the most successful Indian businessmen ever.
Recently, Bloomberg reported that the Saudi sovereign wealth fund is also one of the firms exploring investments in Jio Platforms.
“Saudi Arabia’s $320 billion Public Investment Fund is considering buying a minority stake in Reliance Industries Ltd.’s Jio Platforms unit,” said the Bloomberg report, citing people, who asked not to be identified as the information is private.
RIL has been considering several asset monetization plans to reduce its debts. The group’s chairman Mukesh Ambani had said last year that the group was in talks to sell a 20% stake in oil-to-chemicals division to Saudi Aramco at an enterprise value of $75 billion. RIL is also awaiting the government’s approval for a stake sale in the company’s telecom towers business to private equity firm Brookfield Asset Management. In July 2019, RIL had announced that it had entered into an investment of Rs. 25,215 crore in Jio’s telecom tower assets.