Reliance Industries (RIL) on Friday announced a 0.39 per cent stake sale in Jio Platforms, its digital services subsidiary, to Intel Capital for Rs 1894.50 crore.
The latest fund raising news comes on the back of RIL’s announcement that it has turned net debt free ahead of its March 2021 deadline. As on March 31, Reliance had a net debt of Rs 1.61 trillion.
Intel Capital is an arm of Intel, the world's largest semiconductor manufacturer. It joins eleven other investors, including sovereign funds and private equity firms, who now collectively own 25.09 per cent stake in Jio Platforms.
In the last two months, Jio Platforms has raised Rs 1.17 trillion through the stake sales to ramp up its digital services business and expedite its debt reduction goals.
"Intel Capital has an outstanding record of being a valuable partner for leading technology companies globally. We are therefore excited to work together with Intel to advance India’s capabilities in cutting-edge technologies that will empower all sectors of our economy and improve the quality of life of 1.3 billion Indians," Reliance chairman Mukesh Ambani said in a statement.
Wendell Brooks, president, Intel Capital , 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."
The latest round of investment led to a 1.53 per cent uptick in the RIL stock which closed at Rs 1,787.5. The digital services segment is expected to be the key contributor for Reliance Industries going ahead. Digital services accounted for just 10 per cent of the company’s operating profit in FY18 and was the third largest segment in FY20 after petchem and refining.
However, analysts at HSBC expect it to contribute 36 per cent of RIL’s consolidated operating profit for FY21, the highest across its segments. Both, the digital and more importantly the retail business, are expected to drive the next round of value unlocking in RIL. The two segments are expected to be listed over the next three to five years.
Speaking on the oil and gas business, Jyoti Roy, DVP, equity strategist at Angel Broking said that the segment would recover in the second half of the year as demand for petro products normalises. “Given no significant capex outlay in the near future, the hydrocarbon segment should generate free cash flows which can be used to fund expansion in other businesses," he said.