Reliance Industries (RIL) has targeted the unlocking of value of over Rs 87,148 crore, which translates into over 19 per cent of its stake in Jio Platforms (JPL), as part of its plan to become a debt-free group.
To achieve this goal, the company on Friday announced its third deal in which Vista Equity Partners will invest Rs 11,367 crore in JPL in return for a 2.3 per cent stake in it.
After the two earlier deals with Facebook and Silver Lake and now the deal with Vista, RIL has already raised Rs 60,596 crore for a total 13.37 per cent stake in JPL.
To meet its value unlocking target in JPL, based on current average valuation (average of the three deals), RIL will tie up investors to take another 5.8 per cent in JPL for Rs 26,552 crore.
The JPL value unlocking, together with the proposed right issue and the JV deal with British Petroleum on fuel retailing, will be enough for the group to come pretty close to its aim to become net debt free (currently it has a debt of Rs 161,000 crore).
In a discussion with analysts, V Shrikant, joint CFO of RIL, hinted at their target value for unlocking in JPL.
“In some sense this (Facebook deal) is 50 per cent of the target value unlocking we have in mind. And we have also mentioned that we have received interest from global investors for a similar sized additional stake,” said Shrikant.
The value target for JPL monetisation looks pretty feasible and, once complete, the cash generated will help to slash the group’s debt by more than half. That apart, RIL’s proposed rights issue is expected to raise another Rs 53,125 crore. The JV with BP is expected to fetch Rs 7,000 crore. The money rustled up from these three deals alone will fetch the group over Rs 147,000 crore.
Moreover, it should be noted that this will be without the proposed $15 billion Aramco deal to buy a stake in RIL and without the Brookfield deal for buying the tower assets. But if the Rs 25,000 crore Brookfield deal which is awaiting clearances also goes through, then the group will have cleaned up its entire debt.
If that happens, the Aramco agreement, once it gets all the clearances, will be the icing on the cake.
The RIL deal with Silver Lake was undertaken at a 12.5 per cent premium over the Facebook transaction, with the private equity firm investing Rs 5655.75 crore for an over 1 per cent stake. The deal with Vista is more or less in line with the same valuation. JPL, which has a 100 per cent stake in Reliance Jio, apart from owning various digital platforms, is in turn a fully owned subsidiary of RIL.