Reliance Jio sells stake to Vista Equity Partners for $1.5B; deal fuelled by Gujarati connection

Reliance Jio has sold 2.3 percent stake to US-based PE fund Vista Equity Partners. This is the third foreign investment in Jio Platforms in three weeks.

Reliance Jio sells stake to Vista Equity Partners for $1.5B; deal fuelled by Gujarati connection

Friday May 08, 2020,

3 min Read

Four days after Reliance Jio struck a deal with Silver Laker Partners, it has earned fresh investments from another US-based tech-focused private equity fund.

Vista Equity Partners has acquired 2.32 percent stake in Jio Platforms for an estimated $1.5 billion (Rs 11,367 crore), becoming the third largest shareholder in the company after Reliance and Facebook.

The Vista investment pegs Jio Platforms' equity valuation at Rs 4.91 lakh crore and enterprise valuation at Rs 5.16 lakh crore, Reliance announced in a statement.

Interestingly, the partnership was fuelled by the Gujarati connection between the Ambani family and Vista's Co-founders Robert Smith and Brian Sheth (who's half-Indian). Conversations were also carried out by senior Vista executive Monti Saroya (who is also Indian-American) and Reliance's Manoj Modi (a close aide of Mukesh Ambani).

Reliance Jio

Reliance Industries Chairman Mukesh Ambani with son and Reliance Jio Director Akash Ambani

Reliance Industries Chairman Mukesh Ambani said in a statement,

"Like our other partners, Vista also shares with us the same vision of continuing to grow and transform the Indian digital ecosystem for the benefit of all Indians. They believe in the transformative power of technology to be the key to an even better future for everyone. In Robert and Brian, whose family hails from Gujarat, I found two outstanding global technology leaders who believe in India and the transformative potential of a Digital Indian Society."

Vista is a global investment firm focused on growing enterprise software, data, and technology-enabled companies that are catalysts of change. It has more than $57 billion in cumulative capital commitments across the world.

Robert F Smith, Founder, Chairman and CEO of Vista, said,

“Mukesh’s [Ambani] vision alongside Jio’s world-class leadership team have built a platform to scale and advance the data revolution it started. We are thrilled to join Jio Platforms to deliver exponential growth in connectivity across India, providing modern consumer, small business, and enterprise software to fuel the future of one of the world’s fastest growing digital economies.”

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Jio Platforms is increasingly being courted by foreign investors as the company endeavours to become net-debt free this year. Reliance Industries started restructuring its group companies in late 2019 to pave the way for strategic investments in its telecom, retail, and petrochemical businesses.

Prior to this and the Silver Lake deals, Facebook had invested $5.7 billion for a 9.99 percent stake in Jio Platforms, becoming its largest minority shareholder.

Equity analysts believe that recent investments have taken Jio closer to a prospective IPO. Reliance plans to dilute as much as 20 percent equity stake in Jio Platforms.

Sanchit Vir Gogia, Founder and CEO, Greyhound Research, a tech advisory firm, says,

"Jio's intent here is clearly three-fold: debt reduction and overall profitability; equity dilution at tech valuations; and sentiment uptick with global names. Jio Platforms should, in theory, get listed sooner than later – and that should dramatically change valuations."

The Jio-Vista transaction is subject to regulatory and other customary approvals.

Morgan Stanley was the financial advisor to Reliance Industries, while AZB & Partners and Davis Polk & Wardwell acted as legal counsels.

(Edited by Teja Lele Desai)

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