

US-based TPG Capital is in active
discussions with Jio Platforms as investors seek to buy into Mukesh Ambani’s
telecom-technology-commerce triple play, said people in the know. If a deal
happens, TPG would join bulge-bracket American private equity peers KKR, Silver
Lake and General Atlantic in picking up a stake in the Reliance Industries
unit.
TPG is an investor in several top
global technology disruptors such as Uber, AirBnB and SurveyMonkey. The PE
fund, known primarily for leveraged buyouts, has been in talks for the past few
weeks and is expected to be nearing a deal that might see it invest $1-1.2
billion, similar to the previous rounds in Jio Platforms, said the people
mentioned earlier. One of them said the investment could be as high as $1.5
billion. A formal announcement is expected in the next few days.TPG declined to
comment. Mails to Jio did not generate any response till press time
Wednesday.
Jio Platforms has already raised
INR 97,885.65 crore (nearly $13 billion) by diluting a 21% stake through eight
transactions in seven weeks to a host of strategic and financial investors, starting
with Facebook. With 388 million subscribers, the telecom business has become
Reliance Industries’ growth engine, helping — along with the group’s
fast-growing retail business — to offset the decline in oil and petrochemicals,
the legacy cash cows.
Besides Facebook and buyout funds
such as KKR, middle-eastern sovereign funds like Mubadala and Abu Dhabi
Investment Authority (ADIA) have joined the Jio Platforms fund-raising
juggernaut. With the latest investment from ADIA, which was announced last Friday,
Jio Platforms is being valued at <Rupee>4.91 lakh crore, excluding debt
and liabilities. Saudi Arabia’s Public Investment Fund (PIF) is also engaged
with Jio Platforms for a $1.5-billion investment and is expected to finalise negotiations in 7-10 days.
Other than new-age tech and
internet unicorns, the Texas-headquartered buyout fund has backed or bought
several pure-play technology businesses such as McAfee, First Data, Freescale
Semiconductor, Avaya, Box and WindRiver.
Reliance Industries may Sell 9%
More in Jio Platforms In 2019, TPG garnered $1.6 billion for its TPG Tech
Adjacencies, a new investment vehicle focused on capital solutions for the
technology industry. In February this year, its seventh Asia fund — TPG Capital
Asia VII — raised $4.6 billion.
In India, TPG has deployed over
$2 billion since setting up shop in the early 2000s across sectors such as
financial services, retail, healthcare and pharma.
“In the past 5-6 weeks, the TPG
conversation has intensified. Like most funds, it is also looking at new
opportunities during the pandemic,” said an official involved in the
negotiations who did not wish to be identified as the discussions are in the
private domain.
In April, TPG did its first deal
during the pandemic, buying a majority stake in LifeStance Health Inc, a
provider of lower-cost health services.
In a recent interview to
Bloomberg, TPG’s co-CEO Jon Winkelried said he is scouting for more deals in
education and broadband communications — two industries where Winkelried sees
winners emerging from the dislocations and demands created by social distancing
and working remotely.
Attracting Investors In that
context, Jio Platforms appears to fit the bill. RIL’s platform approach to
create a digital ecosystem has attracted the attention of investors. Having
already diluted over 20%, RIL watchers feel Ambani could shed another 9% before
he lists the company, which could happen at a $100-billion valuation. The fund-raising spree across subsidiaries,
ahead of the planned IPO for Jio, along with an ongoing mega rights issue and
slowing down of new investments, is also expected to deleverage Reliance
Group’s balance sheet after an estimated $40 billion of capex to build the
world’s largest 4G network.
“RIL has successfully managed to
position itself as a zero-debt tech company in an environment of the virtual
economy taking precedence over real. This has the added advantage of taking
attention away from a weaker near-term refining outlook,” said Jal Irani of
Edelweiss.
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Wouldn't it be a good idea to create a course?