India's Digital Conglomerate

Reliance industries ltd,(RIL) has hit again the top of the news of the nation and this time by breaking all records by receiving  highest amount of “Foreign direct investment” (FDI) in 1 single year and  becoming  highest  FDI grossing company not only in India, Asia, but in world.

In the previous article: - “DECIPHERING RIL’S DEBT FREE VISION” we had already discussed regarding the need for the company to takes such major steps and its impact on the company. Reliance debt pattern over the years and the ways by which company raised funds to pay off the debt and the percentage of stake sold out to raise such funds to meet its rupees 161,035 crore worth debt.

Today Reliance industries direct subsidiary “JIO PLATFORM” has raised in total of Rs.87, 655.35 crore worth funds from leading global technology leaders and growth investors like Facebook, silver lake, vista, general Atlantic, KKR. (The details of which are already discussed in previous article “Deciphering RILs Debt Free Vision”) in less than six months.

In total 6 big investors have already identified the growth prospect in India’s telecom sector and the potential of reliance JIO platform in the sector and have already invested in the company within such a short span of six weeks.

Even after this the company was not satisfied, as such the goal of becoming a debt free company had to be fulfilled before its deadline. To do this company had to get into more Foreign Direct Investment deals.

FOREIGN DIRECT INVESTMENT DEALS: - (Economic times)

Now coming up to the 7^th investor in the company, which has made its way into India’s telecom sector and joined their hands with reliance is “MUBADALA INVESTMENT COMPANY”.

Mubadala Investment Company is also known as the “Abu Dhabi Fund”, which Abu Dhabi-based sovereign investor and they have invested in total of Rs.9093.60 crore in JIO platform at an equity value of Rs.4.91 lakh-crores and an enterprise value of Rs.5.16 lakh-crore (as per RIL release), For a total of 1.85% equity holding in JIO platform.

The 8^th investor in company is “ABU DHABI INVESTMENT AUTHORITY‘s” wholly owned subsidiary also known as (ADIA), they have invested in total of Rs.5683.50 crores, for a total stake of 1.16% in JIO platform.

And this doesn’t ends here with the latest news from one of the previous investors in the company (“SILVER LAKE”) has decided to invest an additional Rs.4546.80 crores more in JIO platform.

 And making reliance achieve its “zero net-debt” target way before its deadline, by the end of its 8^TH  deal company as already sold over in total of more than 21% holding in its wholly owned subsidiary JIO telecom.

SUMMARY:-

PARTICULAR	AMOUNT INVESTED(in crores)	% OF HOLDING
Abu Dhabi investment authority	5683.50	1.16%
Mubadala investment co.	9093.60	1.85%
Silver lake	4546.80	2.08%

 

Yet one another news also impacted the stock market was the support which was given by the domestic investors to the company by subscribing in the right’s issue of the parent company (Reliance industries ltd) of JIO telecom, the right’s issue was oversubscribed by 1.59 times, this shows the willingness of investors to be a part of the company, the allotment of equity shares was supposed to take place on 10^th of June and get listed on the exchange by 12^th of June.

                                                    

The chairman of the group and Managing Director (MD) “Mr. Mukesh  Ambani “ commenting on the success of right’s issue said:- “The success of right’s issue has been seen as a vote of confidence by both the Domestic investors as well as the foreign investors and the small retail shareholders in the intrinsic strength of the Indian economy “.

Coming up to the share price of Reliance Industries:-

The share price of the company has tremendously grow in past 2 months although there had been a fall in share price on 14^th of May 2020, since that was the record date of India’s biggest right’s issue. Yet the news of new Foreign Direct Investments making their way into the company did had an effect on the share price of the company  and the share price reached all-time high of Rs.1, 618.40 on Friday 5^th June 2020. Talking about today’s position 8^th June 2020, the last traded price was Rs.1, 571.80 per share. Which is low in comparison to last week’s closing share price. Still with reducing debt the potential capacity of the company to earn is expected to increase which shall be visible on its share price.

COMING UPTO THE DEBT STRUCTURE OF THE COMPANY:- (money control)

PARTICULARS	DEBT AFTER SUCH DEALS(in crores)
KKR Deal	Rs.29,322.00
Mubadal Investment co. Deal	Rs.20,228.40
ADIA subsidiary Deal	Rs.14,544.90
Silver Lake Deal	Rs.  9,998.10

The debt burden is substantially reduced by the company .But with the reducing debt their market equity capitalization has also been rising at the same time. (Times of India)

Reliance’s market capitalization has initially increased by Rs.232, 830 crore from its first deal with Facebook and today there market capitalization is Rs.10, 61,672.57 crores within just 7 weeks there capitalization has reached its peaks.

“The line-up of investors who are ready to invest in the company’s wholly owned subsidiary (JIO telecom) has tremendously grown past pandemic period, not just this Reliance industry was the only stock which had an opposite impact during the pandemic, instead of falling share price due to pandemic it was noted that there has been jump in share price during the pandemic, truly Reliance has outperformed overall market and acted as the as positive sign and boosted the economy by getting influx of Foreign Direct Investment (FDI) in the nation”.

 With this even foreign Institutional Investors (FII) have resumed investing in the Indian stock market and overall domestic market has also started participating and taking role in the market.

“With this it can be rightly said that reliance industries JIO platform is the forefront of India’s digital revolution”.