India's Reliance to sell US$750m stake in unit to Silver Lake, on track to cut debt

[NEW DELHI] India's Reliance Industries said on Monday private equity firm Silver Lake will invest nearly US$750 million in its digital arm, days after securing a US$5.7 billion investment from Facebook, boosting its efforts to cut debt.

The deal adds to a flurry of fund-raising activity announced by the oil-to-telecoms conglomerate in recent weeks including a US$7 billion share sale, with plans to eliminate US$21.4 billion of net debt by the end of the year.

Reliance last week reported a 39 per cent slump in March quarter profit, hit by a sharp fall in oil prices and lower fuel demand, and said at the time it that had received investor interest for a Facebook-like deal. It did not give further details.

The 56.56 billion rupees (S$1.06 billion) deal with Silver Lake values Jio Platforms - the digital services entity that houses Reliance's telecoms arm Jio Infocomm, its music and video streaming apps, at about US$65 billion, Reliance said in a regulatory filing.

Silver Lake's investment, at a 12.5 per cent premium to the equity valuation of the Facebook deal, gives it slightly more than a 1 per cent stake in Jio Platforms.

"Silver Lake has an outstanding record of being a valuable partner for leading technology companies globally," Reliance chairman and tycoon billionaire Mukesh Ambani said in a statement. "We are excited to leverage insights from their global technology relationships for the Indian digital society's transformation."

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Silver Lake has about US$40 billion in assets under management, and its portfolio of companies includes social media firm Twitter, computer hardware maker Dell Technologies, and movie theatre chain AMC Entertainment Holdings.

Unlike traditional mobile carriers, which depended on voice services to make money, Mr Ambani has always pitched Jio, which launched in late 2016, as a trailblazer tech company that has helped hundreds of millions of Indians use the Internet for the first time.

Facebook said late last month it would buy a 9.99 per cent stake in Jio Platforms, as it looks to capitalise on WhatsApp's 400-million strong user base in India and roll out services for grocers and small businesses.

The partnership will help Reliance use Facebook's tech in its new businesses, while giving the US tech giant's India reach a massive fillip with a formidable partner in Mr Ambani, who is widely perceived to be influential in government circles.

Silver Lake's investment highlights Reliance's ability to monetise its digital services business and further adds to the company's already strong financial flexibility, Moody's Investors Service said in a note.

Shares in the Mumbai-headquartered Reliance were trading down 1.3 per cent in a broader Mumbai market that was down 4.9 per cent as at 4.55am GMT.

REUTERS