KKR picks up 2.32% stake in Mukesh Ambani's Jio Platforms for Rs 11,367 cr

Capital, Bharti Infratel, Coffee Day Resorts and Max Financial Services, this is its largest investment in Asia

Jio Platforms, the digital services subsidiary of Reliance Industries (RIL), is selling a 2.32 per cent stake for Rs 11,367 crore, with the transaction valuing the firm at an equity value of Rs 4.91 trillion and an enterprise value of Rs 5.16 trillion. Vista Equity Partners and General Atlantic had picked up stakes in Jio at similar valuations earlier this month. Total investment of the five deals announced so far is Rs 78,562 crore for a 17.12 per cent stake.

Commenting on the deal, Mukesh Ambani, chairman and managing director of RIL, said, “We are looking forward to leveraging KKR’s global platform, industry knowledge, and operational expertise to further grow Jio.”

For KKR, which has investments in Avendus Capital, Bharti Infratel, Coffee Day Resorts, and Max Financial Services,  this is its biggest bet in Asia.

 

 

Henry Kravis, co-founder and co-CEO of KKR, believes that few companies have the potential to transform a country’s digital ecosystem the way Jio Platforms is doing in India, and potentially worldwide.  

The investments are expected to help RIL reduce its debt and expand its digital offerings. RIL had a gross debt of Rs 3.36 trillion at the end of the March quarter, and a net debt of Rs 1.61 trillion. The company has indicated that it will become net debt-free by December this year, ahead of its earlier target of FY21-end. 

So far the company has sold 17.12 per cent, but if it sells up to 20 per cent, it can raise just under Rs 92,000 crore.

It also has plans to raise Rs 7,000 crore from UK’s BP for its fuel retail business and Rs 25,000 crore from Brookfield for tower assets (Tower InvIT). The company indicated that due diligence on its 20 per cent stake sale in oil-to-chemical assets to Aramco was ongoing. Analysts expect the $15 billion deal to close by December.

Moody’s Investor Service in a note highlighted that the successful completion of the transactions would help alleviate the negative impact of lower earnings caused by disruptions from the coronavirus outbreak.