General Atlantic Investment in Reliance Jio

As India enters its fourth phase of an extended lockdown amid the CoronaVirus outbreak, RIL strikes another foreign investment deal. This deal is its fourth in less than four weeks. It will add to the $8 billion deal which Reliance has already raised in foreign investment so far in 2020.

Mukesh Ambani-led Reliance Industries has set a goal to become debt-free by March 2021. Earlier, it has managed to surprise stockholders by striking a deal with the technology giant, Facebook. Mark Zuckerberg’s company acquired a 10 percent stake in Reliance Jio platform in a premium deal of Rs 43,574 crore investment. The Reliance Jio-General Atlantic deal

is expected to swing the mood of the market and boost investors’ morale, which was low since last week.

Highlights of the deal

• US tech investor giant General Atlantic has agreed to buy a 1.34 percent stake in Reliance Jio platform.
• Reliance Jio-General Atlantic deal is parked at Rs. 6,600 crores.
• It will send Reliance Jio’s equity value soaring at 4.91 trillion and enterprise value to 5.16 trillion.
• Reliance in this year has also secured two other deals with Silver Lake and Vista Equity for $2.25 billion in total.
• It is also planning to raise $7 billion in new shares further.
• General Atlantic’s investment in Jio will further assist RIL in eliminating $21.4 billion in net debt by this year.
• Morgan Stanley has been appointed as the financial advisor, and AZB and Partners, and Davis Polk & Wardwell will act as legal counsels.

Who is General Atlantic?

After Reliance announced a deal with General Atlantic, stockholders are trying to get as much information as they can about the new investor.

• General Atlantic is an American Private Equity firm established in 1980 that invests heavily in technology, financial services, and healthcare.
• Previously they have invested in global brands like Airbnb Inc., Alibaba, Uber, Facebook, Snapchat, ByteDance, and more.
• It is the newest marquee investor for Reliance Jio.
• As on March 31, 2020, General Atlantic has a $34 billion in assets under management, including a $3 billion investment in Indian startup unicorns.
• General Atlantics has plans to invest an additional $1.5 billion in Indian firms by 2021.

What does it mean for Reliance Jio?

It is undoubtedly a piece of great news for Reliance and its stockholders alike. In welcoming General Atlantics, Mr. Mukesh Ambani said, “I am thrilled to welcome General Atlantic, a marquee global investor, as a valued partner. I have known General Atlantic for several decades and greatly admired it for its belief in India’s growth potential. General Atlantic shares our vision of a Digital Society for India and strongly believes in the transformative power of digitisation in enriching the lives of 1.3 billion Indians. We are excited to leverage General Atlantic’s proven global expertise and strategic insights across 40 years of technology investing for the benefit of Jio.”

Reliance Jio, which started three years ago in 2016, has already emerged as the largest telecom service provider in India, sending its competitors scampering to hold on to their market shares and others to forge mergers. It is projected as a technology platform to digitise India in the near future. Jio is emerging as a complete digital platform with a capacity to transform every sector – from education to payment, retail, and more. With a series of new deals, Reliance is gradually moving to become the largest technology giant in India.

Summary:
The latest deal will add more value to Reliance Jio as a company and prompt a rally in its shares. There is news that may be Saudi Arabia’s Public Investment Fund (PIF) is also eyeing to hold a minority stake in the company.