Reliance to sell $750 million stake in unit to Silver Lake, on track to cut debt

NEW DELHI/BENGALURU: India's Reliance Industries Ltd (RELI.NS) said on Monday private equity firm Silver Lake will invest nearly $750 million in its digital arm, days after securing a $5.7 billion investment from Facebook Inc (FB.O), boosting its efforts to cut debt.

The deal adds to a flurry of fund-raising activity announced by the oil-to-telecoms conglomerate in recent weeks including a $7 billion share sale, with plans to eliminate $21.4 billion of net debt by the end of the year.

Reliance last week reported a 39% slump in March quarter profit, hit by a sharp fall in oil prices and lower fuel demand, and said at the time it had received investor interest for a Facebook-like deal. It did not give further details.

The 56.56 billion rupees ($746.7 million) deal with Silver Lake values Jio Platforms - the digital services entity that houses Reliance's telecoms arm Jio Infocomm, its music and video streaming apps, at about $65 billion, Reliance said in a regulatory filing.

Silver Lake's investment, at a 12.5% premium to the equity valuation of the Facebook deal, gives it slightly more than a 1%stake in Jio Platforms.

"Silver Lake has an outstanding record of being a valuable partner for leading technology companies globally," Reliance Chairman and tycoon billionaire Mukesh Ambani said in a statement. "We are excited to leverage insights from their global technology relationships for the Indian digital society's transformation."

Silver Lake has about $40 billion in assets under management, and its portfolio of companies includes social media firm Twitter Inc (TWTR.N), computer hardware maker Dell Technologies Inc (DELL.N), and movie theatre chain AMC Entertainment Holdings Inc (AMC.N).

Unlike traditional mobile carriers, which depended on voice services to make money, Ambani has always pitched Jio, which launched in late 2016, as a trailblazer tech company that has helped hundreds of millions of Indians use the Internet for the first time.

Facebook said late last month it would buy a 9.99% stake in Jio Platforms, as it looks to capitalise on WhatsApp's 400-million strong user base in India and roll out services for grocers and small businesses.

The partnership will help Reliance use Facebook's tech in its new businesses, while giving the U.S. tech giant's India reach a massive fillip with a formidable partner in Ambani, who is widely perceived to be influential in government circles.

Silver Lake's investment highlights Reliance's ability to monetise its digital services business and further adds to the company's already strong financial flexibility, Moody's Investors Service said in a note.

Shares in the Mumbai-headquartered Reliance were trading down 1.3 in a broader Mumbai market .NSEI that was down 4.9% at of 0455 GMT.