Reliance Jio-ADIA Deal: All You Need to Know

By Angel Broking | Published on 22nd June 2020 | 174

Reliance Jio-ADIA Deal: All You Need to Know

Reliance Industry Ltd. stocks are one of the few shares that maintained high-performance level even when NSE and BSE both experienced steep fall. Over the last two months, Reliance has signed a few ground-breaking investment deals with leading global investors, including one with Facebook and others with the top USA marquee investors. Naturally, when Reliance announced its latest collaboration with the Abu Dhabi Investment Authority (ADIA), its shares rallied to rise by 3 percent. 

The deal between Reliance and ADIA is signed for Rs 5,683.50 crore, making the middle-eastern investor an owner of 1.16 percent stake in Reliance’s digital unit. It has taken the total investment in Jio platform to Rs 97,885.65 crore. 

Last year, RIL supremo, Mukesh Ambani set the target to reduce Reliance Industry’s net debt level to zero by March 2021, paving ways for interested foreign investors to bet their capital in Reliance Industry Ltd. 

Reliance launched Jio, its telecom service in 2016 and rapidly captured the market with affordable 4G connectivity. Fierce competition from Jio pushed the other market players like Airtel and Vodafone to the corner, forcing them to join a price war. Jio currently is the largest telecom service provider in Indian and emerging as a complete digital platform, which might have attracted all these big investment companies towards it. Nonetheless, it will help Reliance shed its debt burden and become debt-free as promised. 

As the news of Abu Dhabi Investment Authority and Reliance deal broke, its shares jumped by 3 percent to touch 52-weeks high; traded in BSE for Rs 1,624 and NSE for Rs 1,618.40. 

Nuances of the deal

  • It is Reliance’s eighth deal in seven weeks
  • It will make ADIA 1.16 percent stakeholder in Reliance Jio platform, joining the table with Facebook, Silver Lake, Vista PE and General Atlantics 
  • With the new investment of Rs 5,683.50 crore, the total invested value in Jio platform goes to Rs 97,885.65 crore
  • It will take the equity value of Jio to Rs 4.91 lakh crore and enterprise value to Rs 5.16 lakh crore
  • With the deal between Reliance and ADIA, total foreign holding in the company goes up to 21 percent
  • Reliance is India’s largest and the third-largest telecom provider in the world 

Welcoming ADIA onboard, Mukesh Ambani said, “I am delighted that ADIA, with its track record of more than four decades of successful long-term value investing across the world, is partnering with Jio Platforms in its mission to take India to digital leadership and generated inclusive growth opportunities. This investment is s strong endorsement of our strategy and India’s potential.” 

What is ADIA? 

The Abu Dhabi Investment Authority is a subsidiary of Emirate of Abu Dhabi, founded to assist the Abu Dhabi government with investment possibilities. It gets its funding from sovereign wealth like Mubadala, which has also invested in Reliance recently. 

Conclusion 

Reliance has signed some big and significant deals in the last two months which have added to its value as an enterprise. Its shares are currently trading at one-year high and being one of the big boys of NIFTY index, is likely to keep the market spirit up.