Global investors in Jio, Reliance Retail may stay invested post 5 years

The marquee investors in the asset-rich subsidiaries of Reliance Industries (RIL) -- Jio Platforms Ltd (JPL) and Reliance Retail Ventures Ltd (RRVL)--- are likely to continue with their stakes in telecom and retail ventures of billionaire Mukesh Ambani, post their first five-year term which will be completed in the second half of 2025.

According to sources in the know, the global investors including Meta (Facebook), Google and a slew of global private equity investors, are satisfied with the performance of the companies and the present valuations. "The investors expect further increase in valuation with the separation and listing of businesses,” said an executive.

Ambani is open to broadening the investment base with an IPO of JPL by the end of this year, according to sources. JPL and RRVL are loaded with investments of over ₹2 lakh crore from marquee global investors. It was in the midst Covid-19 breakout in mid-2020, that Ambani surprised the world with his financial clout by raising capital to reduce the liabilities of RIL to net zero.

JPL raised ₹152,056 crore from 13 investors including Facebook and Google and RRVL raised ₹53,000 crore from eight investors in 2020-21. On the additional funding side, RIL had executed a ₹53,125 crore rights Issue, besides selling nearly half of its stake in the fuel retailing business to BP Plc for ₹7,629 crore around the same time. It had raised ₹25,215 crore from Brookfield by selling the mobile tower InvIT and around ₹8,000 core from ADIA and PIF for the stake in optic fibre InvIT.

With these fundraisings, RIL had achieved net debt zero, before Jio spent over ₹2 lakh crore for acquiring 5G airwaves and building the network. The company had a net debt of ₹1.16 lakh crore in September 2024. "The private equity giants count the first five years of their investment as the breeding time and they divest their stakes in the next five years. However, the private investors in both entities are less keen on exiting the business as they expect value multiplication following the IPO, said a Mumbai-based investment banker.At the 2019 annual general meeting (AGM) of RIL, Ambani mentioned that both entities would “move towards listing within the next five years”.

The massive fundraising from Facebook, Google and global private equity investors --- including KKR, General Atlantic, Silver Lake Investors, Mubadala, Abu Dhabi Investment Authority (ADIA) and TPG --- changed the investor perspective on Ambani’s new businesses. Morgan Stanley Research values (sum of the parts or SOTP) valuation) RRVL is near ₹9.2 lakh crore, while Jio is at ₹6.5 lakh crore in its recent report.

Jefferies’ SOTP valuation of JPL stands at ₹7.55 lakh crore and RRVL at ₹7.52 lakh crore.JPL received ₹43,574 crore from Facebook for a 9.99% stake in July 2020. In November same year, Google paid ₹33,737 crore for a 7.73% stake. At a conservative valuation of ₹7 lakh crore, Facebook’s stake in JPL would be worth ₹70,000 crore. Google’s stake would be worth around ₹54,000 crore. CLSA expects a potential IPO of Jio later in 2025 and it said in a report that the monetisation of Jio’s 5G network through higher data usage and the ramp-up in AirFiber subscribers should add to the excitement ahead of the IPO in late-2025. According to Jefferies, retail growth recovery and Jio's listing will be the key to a favourable risk-reward ratio.