Asia’s Richest Man Mukesh Ambani Sells Nearly A Quarter Of His Jio Platforms

Saudi Arabia’s sovereign wealth fund is the latest to join the long line of investors looking to gain exposure to India’s tech and telecom sector via an investment in Jio Platforms, the telecom and digital business of Indian billionaire Mukesh Ambani.

The Public Investment Fund will buy a 2.32% stake in Jio for 113.67 billion rupees ($1.5 billion), Ambani’s oil and gas giant Reliance Industries said in a statement on Thursday, the eleventh investment in its telecom unit in nine weeks. So far Jio has sold 24.7% of the company to raise 1156.93 billion rupees ($15.3 billion).

In a statement Ambani, who serves as chairman and managing director of Reliance Industries, said the company had “enjoyed a long and fruitful relationship” with the Kingdom of Saudi Arabia for many decades and the relationship was now moving from an oil economy “to strengthen India’s New Oil (Data-driven) economy.”

His Excellency Yasir Al-Rumayyan, governor of the fund, said that he was “delighted” to be investing in a business that was at the forefront of the transformation of the technology sector in India and that “the potential of the Indian digital economy is very exciting and that Jio Platforms provides us with an excellent opportunity to gain access to that growth.”

The investment came on the heels of news of investments by Abu Dhabi Investment Authority for 1.16% on June 7, and by private equity firms TPG and L Catterton for 0.93% and 0.39% respectively, on June 13.

Rajiv Sharma, head of equity research at SBICAP Securities, said that “a 25% stake sale in Jio seems to have been the plan and we may not see much news of investments post this.” But, Reliance will aim to “unlock further value by a listing of Jio. The investors who have come in will have a 5-7 year window of investment before an IPO but the possibilities of a listing are sooner rather than later,” he added.

As of Thursday, Ambani has a net worth of about $60.7 billion, making him the richest person in Asia. (Disclosure: Reliance Industries owns Network18, which published Forbes India.)

The Jio investments started with a bang on April 22, when social networking giant Facebook agreed to acquire close to 10% for $5.7 billion. Since then, four U.S. private equity firms invested in Jio: Silver Lake Partners bought just over 1% for $748 million, Vista Equity Partners paid $1.5 billion for a 2.3% stake, General Atlantic acquired a 1.3% stake for $870 million and KKR paid $1.5 billion for a 2.3% stake.

The flow of funds from the Middle East started with Mubadala Investment Co. which has picked up a 1.85% stake.

PIF’s investment values Jio at $65 billion—the same amount as the previous several deals and a 12.5% premium to the first investment, by Facebook.

With 388 million subscribers, Jio has become Reliance’s growth engine, combining with the company’s fast-growing retail arm to help in offsetting the decline in oil and petrochemicals. Its total annual revenue increased by 5% to $87.4 billion and it reported a net profit of $5.3 billion in the fiscal year ended March 2020.

The Jio deals will help reduce Reliance’s heavy debt burden, which stands at $44.4 billion. Ambani has said he is committed to reducing Reliance’s net debt to zero by 2021.

Reliance also raised $7 billion in a rights issue that closed earlier this month. It was the conglomerate’s first in three decades and the largest in the country. Funds raised from that will also go toward paring down its debt.

In August, Reliance announced that it would sell a 20% stake to Saudi Aramco for approximately $15 billion, and would use those funds to pay off some of its creditors. However, the recent plunge in oil prices has left that deal under a cloud of uncertainty.

In the wake of these investments, India’s two remaining telecom companies are also reportedly in talks with global investors.

According to a Reuters report, global online retail giant Amazon is in early-stage talks to spend at least $2 billion for a roughly 5% stake in Indian mobile operator Bharti Airtel.

Alphabet Inc’s Google is also exploring an investment in Vodafone Idea, a joint venture between Britain’s Vodafone Group Plc and India’s Idea Cellular, the Financial Times reported, a report denied by the Indian telecom company.