Reliance Jio's fibre arm to raise Rs 14,700 cr through InvIT offer

Another Rs 25,000 cr to be raised by way of debt

Reliance Industries Ltd (RIL) on Thursday started the process of monetising its fibre optic network via an infrastructure investment trust (InvIT) structure. Digital Fibre Infrastructure Trust (DFIT) will raise around Rs 14,700 crore by issuing units to its investors, and raise another Rs 25,000 crore by way of debt, which will be used to retire the debt of the fibre optic arm. The 51 per cent of the fibre optic business will be owned by DFIT, and the rest by RIL.

According to the prospectus filed with the Securities and Exchange Board of India (Sebi), the fundraising will be done by seeking investments in DFIT and issuing units to the investors. When contacted, a spokesperson for RIL declined to comment.

The fibre optic unit, which was earlier part of RIL's subsidiary Reliance Jio, has a debt of Rs 87,296 crore, which includes the suppliers' credit.

Reliance Industrial Investments and Holdings Ltd, being the sponsor, will be allotted 15 per cent of the units on a post-issue basis. These units will be locked in for three years. The unitholding of the trust also includes Reliance Projects & Property Management Services Ltd, the contractor for the execution of the fibre optic project, which will hold 44 per cent of the units, while Jamnagar Utilities Power Pvt Ltd (JUPPL) will hold 24 per cent. Sikka Ports will pick up the rest of the units, according to the prospectus.

RIL had earlier raised funds via similar structures for Jio's telecom tower assets and for its promoter Mukesh Ambani-owned gas pipeline company. Canadian financial powerhouse Brookfield had picked up stakes in both the telecom tower and gas pipeline InvITs.

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DFIT’s initial portfolio underlying asset comprises Jio Digital Fibre Private Ltd (Fibre Co), which is in the business of establishing, operating, maintaining, and managing optic fibre cables and related assets, and providing optic fibre infrastructure services to telecommunications service providers. Apart from Reliance Jio, Fibre Co will offer its capacity to other telecom providers, the prosectus said.

On March 31, 2019, DFIT had acquired 51 per cent in Jio Digital Fibre Private Ltd (JDFPL) from Reliance Jio.

In the prospectus, DFIT said that after the allotment of units, it would utilise the proceeds to repay RVL's debt totalling Rs 274 crore and repay other lenders, including RIL.

After raising funds, the Trust will provide a second loan of Rs 25,000 crore to Fibre Co for refinancing or prepayment of its existing debt.

The InvITs have become an attractive tool for Indian companies to hive off their debt and underlying assets and get investors on board. Registered with Sebi, InvIT is an investment scheme like a mutual fund that enables direct investment of money from individual and institutional investors in infrastructure projects to earn a small portion of the income as returns.