#Lockdown 2.0 to #Lockdown 4.0: Be Calm it’s Raining Money

The period between Lockdown 2.0 to Lockdown 4.0 has been all about Jio Platforms in the corporate world. 

Committed Deals: 

1. Facebook: ~ ? 43,600 cr (9.9%), announced on 22 April.
2. Silver Lake: ~ ? 5,700 cr (1.15%), announced on 5 May. 
3. Vista Equity Partners: ~ ? 11,400 cr (2.32%), announced on 8 May.
4. GA: ~ ? 6,600 cr (1.34%), announced on 18 May.    

It is interesting to note that these investments are at different valuations. GA’s investment came at a very high premium, compared to the Facebook deal, almost 12.5%. 

Three more deals may be announced before the lockdown 4.0 ends: 

1. KKR: reports suggest, will be similar to GA’s investment.
2. PIF: reports suggest, nearing finalisation.
3. UAE Mubadala: reports suggest, in discussions.  

It’s not surprising to read, that another 10% of Jio Platforms may be up for grabs! Names of other big PE funds (Blackstone & TA Associates) have also popped up. 

Points to ponder upon: 

1. Does this mean reduced dependence on IPO for Jio PlatformS in the near future? I personally believe it is unlikely. The transaction documents for deals of this nature, would generally include an IPO obligation with an offer for sale component. The amended articles of association of Jio Platforms will be an interesting read. Eagerly waiting for these investments to be consummated.  
2. Will we see Reliance’s net debt to be zero by 2021. RIL had a net debt of ~ ? 1.53 lakh cr (as of December 2019). RIL’s rights issue (? 53,152cr) and these investments are more than sufficient to strengthen the balance sheet. The right entitlement ratio has been fixed at 1:15. There’s a heavy demand for rights issue shares of RIL. There was an exponential jump in the price of RE (almost 40%). As per the terms of the issue, only 1/4th of the issue price has to be invested now, rest can be staggered in instalments over the next 18 months. A win-win situation, as RIL pockets the premium amount without any cost.  
3. Will Jio become the world’s largest 4G network? Looking at the estimated buildup of capex, it’s just a timing question- how soon? 
4. Is Jio Platforms, more of a telecom company or technology company? It’s not about the businesses which it houses, but the kind of valuation it has got recently, clearly indicates that investors have evaluated it as more of a technology company. Jio Platforms is the umbrella, housing all the Reliance owned digital businesses including Reliance Jio, MyJio, JioTV, JioCinema, JioNews and JioSaavn.  

Reports suggest that Jio Platforms is now India’s fourth most valuable company behind Reliance, TCS and HDFC Bank. Jio Platforms has more potential than all other businesses of Reliance taken together (like refining, petrochemical and retail). Having made this blanket comment, let’s not forget that ‘Aramco Deal’ is still on and as the reports suggest, is on track. Reliance will be selling 20% stake in the oil-to-chemical business for ~ USD 15 billion!  

Well as they say, ‘data is more valuable than oil’. Will data reign as the next big thing in today’s Indian economy?

Not just interesting times, but money-minting times ahead for select law firms and advisors in India.