India’s Reliance Industries has now garnered more than one trillion rupees of investment for its digital arm Jio Platforms in less than two months, as the oil-to-telecom conglomerate tries to shift its focus from petrochemicals to internet technologies.
Reliance Industries has announced that it has sold a 0.93% stake in Jio Platforms to global investment firm TPG for 45.47 billion rupees (US$ 600 million) and 0.39% to private equity firm L Catterton for around 19 billion rupees ($250 million), taking the total investment in the digital services platform to 1.04 trillion rupees ($13.7 billion). Other investors include Facebook, Silver Lake, Vista Equity Partners, General Atlantic, KKR, Mubadala and Abu Dhabi Investment Authority.
In 2016, Reliance Industries launched Reliance Jio, causing widespread disruption by offering 4G service that included free calls and cheap data packages. That war of attrition prompted money-losing carriers to exit or merge with others, leaving only three private carriers – Reliance Jio, Bharti Airtel and Vodafone Idea – from about a dozen a few years ago.
After attaining the top position in terms of market share with over 388 million subscribers, Reliance Jio is now being placed in the center of a digital platform to drive the group’s growth into e-commerce, payments and online entertainment. It has extended its online shopping portal JioMart to 200 cities including all metros.
In addition to the investments in Jio Platforms, the company is expected to repay its debt through a combination of cash profit from operations, rights issue proceeds, and divestment of its 49% share in a fuel retailing business to BP. The conglomerate has advanced its debt reduction target and plans to make the company debt-free by December this year.
Reliance Industries is also trying to sell a 20% stake in its oil business to Saudi oil giant Aramco. The deal, which was expected to be finalized by March this year, has been delayed to the end of the year.
Reliance Industries recently announced that its due diligence was on track. During the announcement of the deal last August, the company announced that Aramco will invest US$15 billion).
But in December last year, the government asked a court to restrain the deal to help ensure that Reliance Industries has enough assets to pay arbitration claims in a different case. The government has accused Reliance Industries and Shell, the contractors for Panna, Mukta and Tapti oilfields, of wrongly accounting for costs and profits in these fields, thereby reducing the state’s share of income.