Mukesh Ambani's Jio may get up to $1 billion from KKR

Mumbai: KKR and Co is in active discussions to invest in Reliance Industries’ Jio Platforms, seeking to join peers and technology-focused investors like Silver Lake, Vista Partners and General Atlantic and back the telecom-technology-commerce triple play that Mukesh Ambani is aiming for, said people in the know.KKR has been carrying out diligence for a while now and is expected to be nearing a deal that might see it deploying between $750 million and $1 billion, similar to previous rounds. A formal announcement is expected in the next few days. 75858044Besides KKR, Saudi sovereign fund PIF is also said to be closing in on a stake purchase in Jio Platforms as the company continues to attract marque investors. Reliance is engaged in several parallel dialogues — including with sovereign wealth fund of UAE Mubadala — that are at various stages, said officials directly involved in the discussions.Another 5-10% may be up for GrabsSome believe another 5-10% stake will be up for grabs as Ambani would want to bring down Reliance’s holding in Jio to around 75-80% before its listing. PIF has roped in a global investment bank to help it with the transaction.A Reliance Jio spokesperson did not respond to queries. Mails sent to KKR and PIF did not elicit any response.KKR, known for buyouts, has so far been staying away from minority transactions with no capital protection structures. Some of its peers like Blackstone, the world’s largest alternative investments firm, and TA Associates have in recent weeks evaluated the Jio deal but these discussions have not progressed, at least as of now, according to the sources cited.RIL’S FUND-RAISINGSince April 22, Reliance has raised around $8.8 billion from four strategic and financial investors in as many weeks by selling around 15% in Jio Platforms, starting with Facebook. Last Sunday, General Atlantic, announced it will invest Rs 6,598.38 crore (around $870 million) for a 1.3% stake in the RIL company at an estimated Rs 5.16 lakh crore ($68 billion) enterprise value.The fund-raising spree across subsidiaries, ahead of the planned IPO for Jio, along with an ongoing mega rights issue and slowing down of new investments, is also expected to deleverage Reliance Group’s balance sheet after an estimated $40 billion of capex to build the world’s largest 4G network.Ambani has said he is committed to reducing Reliance’s net debt to zero by 2021.JIO JUGGERNAUTWith 388 million subscribers, Jio has become Reliance’s growth engine, helping — along with the company’s fast-growing retail arm — to offset the decline in oil and petrochemicals, the legacy cash cow. Its total annual revenue increased by 5% to $87.4 billion and it reported a net profit of $5.3 billion in the fiscal year ended March 2020.Analysts believe investors are increasingly valuing Jio more as a technology company and less a telecom company. Jio Platforms houses RIL's digital business — telecom, Jio's apps, digital investments and tech capabilities. The company has, over the last 6-12 months, consistently talked about creating a digital platform, eyeing the sky-high valuations of Silicon Valley giants. Alphabet with $132 billion revenues trade at 11.7 times EV/equity on the back of calendar year 21 estimates.Another technology giant Tencent’s valuations are estimated at 17.8 times while Facebook with $70 billion revenues trades at 11.5 times multiples.

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