New York-based private equity giant General Atlantic plans to invest Rs 6,598.38 crore (US$ 936.07 million) in Reliance Industries Ltd (RIL) in its digital assets subsidiary, Jio Platforms Ltd.
This deal comes just two days ahead of the launch of RIL’s Rs 53,000 crore (US$ 7.52 billion) rights issue and will see General Atlantic pick up a 1.34 per cent stake in Jio Platforms, taking the value of the company at Rs 4.91 trillion (US$ 69.66 billion).
In the last month, with the latest deal, Jio Platforms has raised Rs 67,194.75 crore (US$ 9.53 billion) from marquee tech investors, such as Facebook, Silver Lake, Vista Equity Partners and General Atlantic.
The enterprise value of the Jio Platform has reached Rs 5.16 trillion (US$ 73.20 billion) with the deal with General Atlantic.
“I am thrilled to welcome General Atlantic, a marquee global investor, as a valued partner. I have known General Atlantic for several decades and greatly admired it for its belief in India’s huge growth potential,” said Mr Mukesh Ambani, chairman and managing director, RIL. “General Atlantic shares our vision of a digital society for India and strongly believes in the transformative power of digitization in enriching the lives of 1.3 billion Indians. We are excited to leverage General Atlantic’s proven global expertise and strategic insights across 40 years of technology investing for the benefit of Jio.”
The idea behind the RIL’s strategy to raise funds through a flurry of stake sales is mainly intended at building confidence among potential investors for its mega rights issue amid a volatile equity market during the COVID-19 crisis.
RIL announced raising of Rs 53,125 crore (US$ 7.54 billion) through a 1:15 rights issue (one new share for every 15 shares held) at an offer price of Rs 1,257 (US$ 17.83) apiece on 30 April 2020 and the issue is set to open on 20 May.
RIL will let its subscribers buy the rights issue shares by only making a part payment now and the rest later because of the uncertainties in the market, giving RIL promoters more time to bring in enough money to fully subscribe to the rights issue. Shareholders, those are willing to subscribe to the rights issue will have to pay 25 per cent on application and the rest in one or more tranches. With 50 per cent shareholding, RIL’s promoter group led by Ambani will need Rs 26,600 crore (US$ 3.77 billion) to subscribe to its portion of the rights issue.