Silver Lake to invest USD 750 Million in Jio Platforms

CIOReviewIndia Team | Monday, 04 May 2020, 11:00 IST

Silver Lake to invest USD 750 Million in Jio Platforms

Silver Lake – an American private equity firm will invest Rs.5655.75 crore in Jio Platforms for a 1.5 per cent stake at an equity value of Rs 4.90 lakh crore. This deal that came less than two weeks after the US social networking giant Facebook announced a USD 5.7 billion investment into the unit of Reliance Industries.

Reliance Industries Limited and Jio in a joint statement stated today that, “Silver Lake will invest Rs 5,655.75 crore into Jio Platforms and this investment values Jio Platforms at an equity value of Rs 4.90 lakh crore. With an enterprise value of Rs 5.15 lakh crore, constituting a 12.5 per cent premium to the equity valuation of the Facebook investment that was announced on April 22, 2020”.

Last month, Facebook said it will acquire 9.9 per cent stake in Jio Platforms for Rs 43,574 crore, and according to analysts, this would help reduce debt at Reliance Industries Limited.

“…Silver Lake is one of the most respected voices in technology and finance. We are excited to leverage insights from their global technology relationships for the Indian Digital Society’s transformation,” Mukesh Ambani, Chairman and Managing Director, Reliance Industries Ltd, said in a statement.

“… They (Jio Platforms) have brought extraordinary engineering capabilities to bear on bringing the power of low-cost digital services to a mass consumer and small businesses population. The market potential they are addressing is enormous…,” said Egon Durban, Silver Lake Co-CEO and Managing Partner.

This transaction is bound to regulatory and few other customary approvals as well.

Moody’s Investors Service, the bond credit rating business of Moody’s Corporation, said that the investment further shows Reliance Industries Limited’s ability to monetize its digital services business, reinforces the company’s commitment to achieve a zero-net debt position by March 31, 2021.

“This (Jio-Silver deal) is credit positive as it enhances RIL’s already strong financial flexibility, including the recently announced rights issue ($7 billion) and investments by Facebook Inc,” Vikas Halan, Senior Vice President (Corporate Finance) at Moody’s said in a statement.

He also said that “the initiatives that could reduce net debt by about USD 13.6 billion from the reported net debt of USD 21.4 billion on march 31, 2020. The valuation also establishes another pricing benchmark for Jio Platforms.”

Jio Platforms also stated that “On account of the extreme economic disruptions caused by the Coronavirus pandemic, worldwide and particularly within our country, this partnership with one of the most renowned tech-investors globally, Silver Lake, has special significance.”

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