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Jio adds Intel backing with Rs 1,894.5 cr stake sale

New Delhi, July 03 | Billionaire Mukesh Ambani’s Reliance Industries on Friday said it has secured Rs 1,894.50 crore from Intel Capital by selling a small stake in its technology venture, adding to a slew of investments since April that has crossed Rs 1.17 lakh crore.

The investment arm of computer chip giant Intel Corp picked up 0.39 percent stake in Jio Platforms Ltd – the unit that houses India’s youngest but largest telecom firm Jio Infocomm and apps.

Intel Capital, which is the 12th marquee firm to invest in the digital unit, values Jio Platforms at Rs 4.91 lakh crore, the company said in a statement.

“Intel Capital joins the list of marquee firms who have recently invested in Jio Platforms, taking the total investment amount to Rs 1,17,588.45 crore,” it said.

The Jio Platforms deal spree began on April 22 with Facebook investing Rs 43,573.62 crore in the company for a 9.9 percent stake. Since then deals have been announced regularly with likes of General Atlantic, KKR, Mubadala, Silver Lake, ADIA buying stake in Jio Platforms.

The Intel deal takes the total stake sold to 25.09 percent.

The stake sale together with a record Rs 53,124 crore rights issue has helped the oil-to-telecom conglomerate Reliance deleverage balance sheet and reduce net-debt to zero earlier than its March 2021 target.

Jio is expected to use its 388 million mobile phone subscribers as the cornerstone of an e-commerce and digital services business to rival Amazon and Walmart’s Flipkart.

Intel Capital invests globally in innovative companies with a focus on disruptive technology areas like cloud computing, artificial intelligence, and 5G – opportunities where Jio is also innovating and investing for growth.

Intel has operated in India for more than two decades and employs thousands of employees at its design facilities in Bengaluru and Hyderabad.

Mukesh Ambani, Chairman and Managing Director of Reliance Industries, said, “Intel is a true industry leader, working towards creating world-changing technology and innovations. Intel Capital has an outstanding record of being a valuable partner for leading technology companies globally.”

Wendell Brooks, Intel Capital President, said, “Jio Platforms’ focus on applying its impressive engineering capabilities to bring the power of low-cost digital services to India aligns with Intel’s purpose of delivering breakthrough technology that enriches lives.

“We believe digital access and data can transform business and society for the better. Through this investment, we are excited to help fuel digital transformation in India, where Intel maintains an important presence.”

The transaction is subject to regulatory and other customary approvals.

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

Commenting on the Intel deal, Morgan Stanley said the asset monetization in Jio Platforms along with the rights issue should reduce RIL’s net-debt by more than half.

“Multiple catalysts are in play with faster than expected de-leveraging, improving demand and margin outlook on refining and chemicals, top-quartile earnings CAGR of 23 percent over F20-23, and digitization, supporting multiples,” it said.

As of March, Reliance had a net-debt of over Rs 1.6 lakh crore.

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