Oil-to-telecom-conglomerate Reliance Industries’ plan to become debt-free by March received a shot in the arm after US-based private equity firm Vista Equity Partners decided to invest in its digital services arm, Jio Platforms.
Reliance Industries will sell its 2.3% stake in Jio Platforms to Vista Equity for around 114 billion rupees (US$ 1.51 billion). The equity valuation of Jio Platforms, which comprises Reliance Jio, JioMoney, JioCloud, Jio Apps, JioMart and JioMeet, was pegged at 4.91 trillion rupees ($65 billion), with an enterprise value of 5.16 trillion rupees.
This is the third time an investor has picked up a stake in Jio Platforms in just over two weeks. Facebook and private equity Silver Lake had invested in two separate rounds 435 billion rupees ($5.76 billion) and 56 billion rupees ($741 million), respectively. Jio Platforms has thus raised around 605 billion rupees through the three rounds of fund raising and the three global companies collectively own 13.4% stake. All three transactions are subject to regulatory approval.
Among Jio Platforms companies, Reliance Jio has emerged as the fastest-growing telecom service provider in the country. It began operations in late 2016 and currently has around 388 million subscribers.
For the fourth quarter Reliance Jio posted a net profit of 23.31 billion rupees and for the entire financial year, its net profit was 55.62 billion rupees.
However, for Reliance Industries the current lockdown and the fall in global crude oil prices has led to the erosion of its bottomline. It posted a 38.7% year-on-year decline in its consolidated net profit at 63.48 billion rupees (US$840 million) for the quarter ended March 2020. It posted a profit of 103.62 billion rupees ($1.37 billion) in the same period last year.
Vista Equity is a leading global investment firm focused on empowering and growing enterprise software, data- and technology-enabled companies that are reinventing industries and catalyzing change.
It has more than $57 billion in cumulative capital commitments and has been investing exclusively in enterprise software for the past 20 years. Vista Equity’s portfolio companies have a significant presence in India with over 13,000 employees.
Reliance Industries chairman Mukesh Ambani welcomed the deal and described Vista Equity as one of the world’s marquee tech investors. “Like our other partners, Vista also shares with us the same vision of continuing to grow and transform the Indian digital ecosystem,” he said.
Vista Equity founder and CEO Robert Smith described Mukesh Ambani as a great pioneer. “We are thrilled to join Jio Platforms to deliver exponential growth in connectivity across India, providing modern consumer, small business and enterprise software to fuel the future of one of the world’s fastest-growing digital economies,” Smith added.