RIL deploys Rs 35,000 crore from Jio stake sales into debt funds

Reliance Industries (RIL), the conglomerate owned by Asia's richest man Mukesh Ambani, is plowing billions into Indian debt funds after receiving cash from stake sales and a rights issue, according to people with knowledge of the matter.

The monies have been deployed into ultra-short and money-market funds, and others focused on debt with an average of three-to-five year maturities, according to fund managers who asked not to be identified in discussing investment details.

Ambani’s dealmaking lured about $20 billion of investments from Google to Facebook into his digital platform in recent months, raising much anticipation over his plans for the money. The scale of Reliance’s fund flows in the past weeks has become the talk of India’s financial markets, with money managers positioning to get a slice of the pie.

The conglomerate, with interests spanning petrochemicals, retail and telecom, may have deployed as much as Rs 35,000 crore ($4.7 billion) across the nation’s debt houses, according to estimates by two of the money managers.

“Lately, we have seen sharp inflows into mutual funds' debt plans from a large conglomerate,” said Dhirendra Kumar, chief executive officer at Value Research, a mutual fund advisory firm, without naming the company. 

“I expect this to continue for some more time.”

A Reliance spokesperson declined to comment.

Rupee flows

Foreign currency traders have pointed to the deluge of Reliance-related money pouring into the nation in recent weeks, which helped the rupee advance more than 1 per cent in the past month to become Asia’s best-performing currency.

In June, Reliance said it became free of net debt after selling stakes in Jio Platforms, its digital unit, its energy business, as well completing a rights issue. So far, the company has received some Rs 1.2 trillion from the Jio investments, according to a tally of company filings.

The Reliance money is for longer-term investment, and isn’t just parked with the funds, according to two of the people. The Indian corporate giant may be taking a bet on the interest-rate cycle with its investments, one person said.

Giant in markets

The fund flow is adding to the rally in short-duration bonds, with banks and investors also jumping into such debt amid expectations for more rate cuts by the Reserve Bank of India. The 5.22 per cent 2025 bond yield has dropped 19 basis points this month, more than the eight basis points decline in the benchmark 10-year yield.

Reliance’s influence in the financial market has in the past also drawn attention. Last year, the company and a unit accounted for more 60 per cent of a currency swap auction held by the central bank. 

Back in 2017, it dropped more than Rs 7,000 crore into funds betting on interest-rate declines.