With the Rs 6,598.38 crore investment of General Atlantic in Jio Platforms (JPL) for 1.34 per cent stake, the strategic investment from American companies in the telecom arm of Reliance Industries (RIL) surged to Rs 67,194.75 crore. So far, social media giant Facebook, private equity players Silver Lake Partners, Vista Equity Partners and General Atlantic have announced their investments and they will together hold 14.8 per cent stake in JPL. Of this, Facebook with 9.99 per cent stake will have a board position.
The stake purchase in JPL is the largest investment by New York-based General Atlantic in Asia. RIL said that the investments will enable Reliance Jio to scale its ecosystem towards building a digital society in India. Jio is being built as the next generation software product and platform company. The digitisation opportunity in India after COVID-19 pandemic and Jio's capabilities in cutting-edge technologies and tools such as AI, Blockchain, AR/VR, Big data have attracted the global giants, said the company.
JPL was created as a subsidiary of RIL in October last year to bring together all digital and mobility businesses under one roof. The new entity has become the parent of Reliance Jio Infocomm and applications like MyJio, JioTV, JioCinema, JioNews and JioSaavn, besides content-generation ventures. Thus, the operating company Reliance Jio became a step-down subsidiary of RIL.
For making JPL debt-free, the parent company has infused Rs 1.08 lakh crore in it. They want to build JPL like Alibaba and Google, which claim high valuations in the stock markets. The Facebook deal emphasises that JPL will expand as a digital giant for India. RIL has been using the cash flow from its flagship petroleum refining business to build the telecom and retail subsidiaries all these years. The Indian conglomerate has spent about Rs 4 lakh crore to build Reliance Jio.
Mukesh Ambani plans to cut RIL's net debt to zero by March 2021, through rights issue of Rs 53,125 crore, the strategic investment of Rs 67,195 crore along with BP Plc's investment of Rs 7,000 crore in fuel retailing joint venture. The company has a net debt of Rs 1,61,035 crore, which increased by Rs 8,000 crore in the last financial year. The company will be able to become net debt-free in this calendar year, V Srikanth, joint chief financial officer, RIL, recently said in a press briefing.
The outstanding gross debt of the company stood at Rs 3.36 lakh crore in March 2020, while cash and cash equivalents at Rs 1.75 lakh crore. The standalone balance sheet has a debt of Rs 2.62 lakh crore, while Jio and Reliance Retail have debts of Rs 23,000 crore and Rs 4,600 crore, respectively, on their books of account.