Deal-making is both an art and a science, and Reliance Industries Limited (RIL) seems to have mastered it better than anyone else. In 7 weeks, RIL has closed 8 deals from 7 marquee global investors. It’s hard to find a parallel to this anywhere else in the world.
As of June 07 2020, the company has divested 21.06% in Jio Platforms for INR 97,885.65 Crore (approximately USD 13.1 Bn). Alongside, RIL has raised an additional INR 53,124.20 Cr (approximately USD 7 Bn) via rights issue that was subscribed 1.59 times. While only 25% of this rights money will come to RIL in the first year, overall the company has raised a total of INR 151,009.85 Cr (approximately USD 20.1 Bn). In effect, RIL will have access to INR 1,11,166.7 crore (approximately USD 14.8 Bn) right away.
Despite raising as much money, we at Greyhound Research believe RIL isn’t done – at least not yet. There’s a lot more that the industry can expect from RIL and Jio Platforms in the coming weeks and months.
Here’s what we believe can be expected here on:
1/ More Investments – As of June 07 2020, RIL has divested 21.06% in Jio Platforms for INR 97,885.65 crore (~USD 13 billion). We at Greyhound Research believe the company can potentially divest another 3-4% to raise additional money in the range of INR 15,000 – INR 25,000 crore.
2/ Vertical Integration – RIL follows the principle of vertical integration wherein it fully owns the supply chain. Jio Platforms is being built similarly – please see the 6C Digital Platform Matrix by Greyhound Research on page 7 for more.
3/ Category Acquisitions – With an aim to build WeChat like model and own a vault position in key categories, RIL can be expected to make acquisitions of category leaders / increase stake in investments. For reference, they acquired Saavn.
4/ Cross Leverage – The intent is to leverage tech to capitalise on assets across RIL portfolio companies. RIL will put to use its recent acquisitions and offer omni-channel retail across key categories like grocery, pharma, electronics, fashion and lifestyle. This is not a digital opportunity alone. This is a hybrid opportunity, where RIL will marry its prowess in both domains.
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5/ New Management – Given the recent spate of foreign investors, RIL will need to make suitable changes to its board and may be even bring in additional leaders for Jio Platforms.
6/ Technology Investments – RIL has made significant investments in technologies like AI/ML, Cloud, IoT, Narrow Band IoT, AR/VR, Identity, Blockchain and a lot more. We at Greyhound Research believe the company will continue investing in these technologies to ensure integration.
7/ Technology Acquisitions – RIL has acquired a wide range of companies including Haptik, KaiOS, Radisys, Aaram Shop, newJ, Tesseract among others. We at Greyhound Research expect similar investments in near future to fill portfolio gaps.
8/ Technology Integration – Over past few years, the company has acquired companies like Saavn, launched new apps and now with the ability to tap onto Facebook suite of apps, investments in integration of technology stack are expected.
9/ Business Expansion – RIL’s intent with Jio Platforms is to not just be a leader in the Indian Digital Platforms space but across global markets and a variety of business categories like Software. For more details on where the company is currently present and aiming to expand, see the 6C Digital Platform Matrix (page 7) and category breakdown of services (page 38).
10/ Global Listing – Silver Lake led Alibaba’s global IPO in 2014 – similar for Jio can be expected in FY 21-22. We at Greyhound Research expect Jio Platforms to be listed in either Nasdaq/NYSE at a valuation of in range of USD 150-200 Bn.
P.S.: For more information on the recent investments, value that each investor brings to Jio Platforms, engagement with Microsoft, impact on Bharti Airtel, and the challenges the company can expect, read this research report by Greyhound Research.
Analyst:
Sanchit Vir Gogia: Sanchit is the Chief Analyst, Founder & CEO of Greyhound Research, a Global, Award-Winning, Technology & Innovation Research & Advisory firm. To read more about him, click here.
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