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Reliance becomes net debt free after raising over USD 15 billion from global investors

Jio Platforms raised USD 1.5 billion from Public Investment Fund (PIF), the sovereign wealth fund of Saudi Arabia, for a 2.32% stake.

Reliance Industries, India’s largest company by market capitalization, has become net debt-free after raising a total of  USD 22.1 billion (INR 168,818 crore) in the last 58 days through funding from global investors and rights issue, the company said on Friday.

“I have fulfilled my promise to the shareholders by making Reliance net debt-free much before our original schedule of 31st March 2021,” Mukesh Ambani, chairman and managing director of Reliance Industries said in a statement.

This comes a day after the company announced USD 1.5 billion fund raise from Public Investment Fund (PIF), the sovereign wealth fund of Saudi Arabia, for a 2.32% stake in Jio Platforms, the digital arm of Reliance Industries.

“We believe 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,” said Yasir Al-Rumayyan, Governor of PIF. “This investment will also enable us to generate significant long-term commercial returns for the benefit of Saudi Arabia’s economy and our country’s citizens, in line with our mandate to safeguard and grow the national wealth of the Kingdom.”

PIF is Jio Platforms’ third investor from the Middle East, after Mubadala and Abu Dhabi Investment Authority put in USD 1.2 billion and USD 750 million, respectively, in the Mumbai-based company. Reliance said with PIF’s investment, Jio Platforms has raised USD 15.17 billion (INR 115,693.95 crore) from leading global investors including Facebook, Silver Lake, Vista Equity Partners, General Atlantic, KKR, Mubadala, ADIA, TPG, and L Catterton, since April 2020.

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Read this: Making sense of Reliance-owned Jio Platforms’ fundraising spree

The PIF’s investment marks the end of Jio Platforms’ current phase of induction of financial partners, it added.

Parallelly, Reliance has raised USD 6.96 billion from a rights issue that closed earlier this month,

“The RIL Rights Issue, which was subscribed 1.59 times, was not only the largest ever in India but also the largest in the world by a non-financial entity in the last ten years,” the company stated.

Over the last few years, Reliance had accumulated billions of dollars in debt, a significant portion of which came from its splurge on dirt-cheap internet services and handsets which made Jio Infocomm the top telecom player in the country. As of 31st March 2020, Reliance had a net-debt of USD 21.2 billion (INR 161,035 crore).

Talking about the clear roadmap in the last annual general meeting with shareholders, Asia’s richest person, Ambani said that the company had received “strong interest from strategic and financial investors” in the group’s consumer businesses, Jio and Reliance Retail.

“We will induct leading global partners in these businesses in the next few quarters, and move towards the listing of both these companies within the next five years,” he had stated then.

Ten months later, the company has said it raised over USD 22.9 billion (INR 1.75 lakh crore) from the capital infusion from investments and rights issue, along with the stake sale to London headquartered BP in the petro-retail joint venture. This total amount raised is well above the net debt the company had accumulated.

“The combined capital raised has no precedence globally in such a short time,” the company stated. “Both of these are also unprecedented in Indian corporate history and have set new benchmarks. This is even more remarkable that this was achieved amidst a global lockdown caused by the COVID-19 pandemic.”