May 23, 2020
As a part of debt-free organization strategy, Jio has come up with yet another deal with Vista Equity Partners who invested a handsome amount of Rs.11,367 crore in Jio Platforms.
From the later days of April, Jio has been the talk of the town and the headlines holder for the tech news in India. First with Facebook, followed by Silver Lake and now with Vista Equity Partners, Jio seems to be attraction hub for the Foreign Investors in India. So, now let’s know a bit more about the new investor of Jio family and about the deal.
Who are Vista Equity Partners?
Vista has over $57 billion in financial investments with twenty years of investing solely in technological firms and businesses. Vista is the biggest venture equity firm globally with a specific technology emphasis.This is the first major investment of Vista in India, said RIL. Today, Vista investor businesses with over 13,000 workers have a significant presence in India. It raised to headlines in September 2018, when Vista announced the sale of Marketo to Adobe Systems for $4.75 Billion.
Following are some of the notable investments of Vista:
- 7 Park
- Greenway Health
- Lone Wolf Technologies
- Radar First
Insights of Jio Vista Equity Partners Deal
On 7th of May, Reliance announced about the deal with Vista Equity Partners. It was very quick news exactly after the deal with Silver Lake. According to the deal, Vista Equity will make an investment of Rs. 11,367 crore and against which, they will get a 2.32% Equity Stake in Jio Platforms. This will stand the second largest FDI deal in Technology sector of India right behind the Jio Facebook deal. It is also the second major investment in Jio Platforms based on the valuation of the deal.
Following are the important matters regarding the deal:
- Vista’s Jio investment prices at a total valuation of $4.91 lakh crore, and the business value of $5,16 lakh crore. Vista ‘s investment value It’s around the same worth as Silver Pool.
- The expenditure by Vista would lead to a completely diluted 2.32% shareholding in Jio Platforms.
- Vista’s investment in Jio Platform makes it the third largest investor behind Reliance Industries and Facebook.
- In less than three weeks, Jio Platforms earned a total of 60,596.37 crore through leading technology investors.
- Morgan Stanley acted as financial advisor to Reliance Industries and AZB & Partners and Davis Polk & Wardwell acted as legal counsels.
- There will be no technology transfers as a part of the deal and Vista Equity Partners will not get chair in BOD of the company.
Mr. Ambani and the officials of the Vista Equity are very much positive regarding the deal and are expecting to gain good returns for both the companies in the future.
Road Ahead for Jio
According to latest financial reports, RIL has a gross debt of Rs.3 lakh crore and net debt of Rs.1.5 lakh crore. Out of it around 40% accounts as part of Jio Platforms debt. The big concern now for Mr. Mukesh Ambani is to make the organization debt free and also not to lose the controlling power while making procedures for the same. Except the tech deals, Saudi Armacothe oil giant of the world is interested to invest around Rs.1.2 lakh crore in Reliance Industries Limited. So, it seems clear that Mr. Ambani is planning to pay off all the debts by selling off the minor stakes of his company.
Following options can be used to progress on the path of making a debt free organization:
- Reliance can come up with IPO for Jio Platforms and raise money from the public as investors.
- Reliance can also come up with a separate IPO for Reliance Retails.
- Can give shares of Jio Platforms as Bonus element on the existing RIL’s shares and registering them later to stock markets.
- Reliance can still attract more Tech Investors from around the world.
As we know the downfall of the counter part i.e. Anil Ambani group was due to the fund crunch when the repayment days were knocking on the doors. Hence, Mr. Mukesh Ambani is playing on safer side from now and he wants to clear it off and not wait for the last day. It lies in the folds of the time that will the biggest business tycoon do to cherish the RIL group and make his brain-child Jio the strongest Telecom and Retail company of India.