Reliance Finds a New Investor in the Mubadala Group
Abu Dhabi-based firm Mubadala has just become the newest investor in India’s telecom giant, Reliance Jio. The firm joins five other American companies, including the likes of Facebook and Silver Lake, as partners to Reliance Jio. It is interesting to note that such high-stake deals are happening at the height of a global health pandemic. Read on to find out more about the agreement and what it means for India’s largest telecom operator.
New Player On the Block
Mubadala will invest almost $1.2 billion in Reliance Jio Platforms in exchange for a 1.85% equity stake in the firm. The deal sees the Indian giant gaining a valuation of close to $65 billion, which is huge as it launched only in 2016. Reliance Jio is a subsidiary of Reliance Industries, which is India’s most valued firm. Reliance has its heart in the petrochemical and oil refining business. Its telecom counterpart, Reliance Jio, has raised close to $11.5 billion by giving away a 19% stake within the last seven weeks.
What Mukesh Ambani Has to Say
Chairman and Managing Director of Reliance Industries, Mukesh Ambani, released a statement saying he is happy to have Mubadala on board. He explains that through his ties with Abu Dhabi, he has had the fortune of seeing the impact the company has had on the UAE economy. Mubadala, he claims work for diversifying and connecting UAE’s knowledge-driven economy to a global workforce. He goes further to say that the company is looking forward to making use of Mubadala’s experience and insights.
What the Investment Shows
This announcement, when coupled with the similar ones that came out in the last few weeks, shows just how eager foreign investors are to fund Jio. Most of these large corporations are looking to gain a slice of what is the world’s second-largest market for internet services. Furthermore, media reports have claimed that Amazon is looking to invest over $2 billion in Bharti Airtel, the country’s third-largest telecom operator. Meanwhile, Google is vying for a similar deal with Vodafone Idea, India’s second-largest telecom operator. India has a massive population of over 1.3 billion people and a huge market for internet and telecom service providers. Therefore, the country has grown to become a global battleground for both Silicon Valley and Chinese firms.
What Mubadala Has to Say
Managing Director and Chief Executive of Mubadala, Khaldoon Al Mubarak, said that watching Jio transform the communication sector in India inspired them to go for this deal. He also said that the company is committed to helping India move further along its digital journey. By partnering with Jio, Mubadala hopes to help the country further its digital economy development. Mubadala is a famous investor, with over $229 billion in assets. The company also has stakes in AMD, Alphabet’s Waymo, and SoftBank.
The infusion of this new capital will help Ambani, cut Reliance’s debt to zero. Reliance’s net debt runs to about $21 billion, and Ambani aims to cut this down to zero by 2021. Also, Reliance Industries has been hit by the global pandemic as its core business has suffered a 37% decrease in net profit. Both the oil refining and petrochemicals are seeing a slump due to the novel coronavirus, and this investment will be a breath of fresh air for the company.
Being a cinephile with a love for all things outdoorsy, Athulya never misses a chance to chase inspiring stories or poke fun at things, even when the subject is herself. Currently pursuing a degree in mechanical engineering, she is someone innately interested in technical and scientific research. Music reviews and op-eds define her as they allow her to explore different perspectives. Though sometimes she thinks she makes more sense playing the guitar than she does while writing.