General Atlantic picks up 1.34% in Jio Platforms

Reliance Industries (RIL) on Sunday announced selling a 1.34 per cent stake in its digital services subsidiary, Jio Platforms, to private equity (PE) firm General Atlantic for ~6,598.38 crore to accelerate consumer business and cut debt.

This is the fourth such stake sale within a month and it values Jio Platforms at ~4.91 trillion on an equity basis and ~5.16 trillion on an enterprise-value basis. So far, RIL has raised ~67,194.75 crore by selling 14.8 per cent in Jio.

While its legacy petrochemical business is facing pressure, Mukesh Ambani-controlled RIL is stitching deals with marquee investors, including Facebook, Silver Lake, and Vista Equity Partners, and expanding service offers to grow its digital business and trim debt.

Alongside the Jio stake sale, RIL is hoping to raise ~53,125 crore in the country’s biggest-ever rights issue. As of March 2020, RIL’S gross debt stood at ~3.36 trillion and net debt stood at ~1.61 trillion. These deleveraging initiatives, along with the proposed stake sale to Saudi oil giant Aramco, will help the company to become net debt-free by March 2021.

General Atlantic, which has assets of over $34 billion under management, has been present in India for nearly two decades.

While its initial investments in India were in technology firms, the PE firm is now focused on sectors such as financial services, technology, health care, and consumer and retail. The Jio stake purchase is its largest investment in Asia.

“In 2020, we have invested close to $1.2 billion in India. This includes two new investments (Unacademy and Jio) and follow-up investment in Byju’s,” said Sandeep Naik, General Atlantic's managing director and head for India and Southeast Asia.

“Jio investment fits into our strategy of backing companies which address the demands and needs of both rural and urban India. We can bring learnings from our global tech investments at General Atlantic and provide value addition to Jio as it executes its plans. I think it’s a very smart strategy on the part of Jio to bring in and leverage the partnership of selective global players to aid its growth,” added Naik.

“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,” RIL Chairman Mukesh Ambani said in a statement. Bill Ford, chief executive officer, General Atlantic, said, “General Atlantic has a long track record working alongside founders to scale disruptive businesses, as Jio is doing at the forefront of the digital revolution in India.”