Abu Dhabi’s Mubadala picks up $1.2bn stake in Reliance’s Jio

Abu Dhabi’s Mubadala will invest $1.2bn in Mukesh Ambani’s Jio Platforms, as the sovereign wealth fund joins Facebook and a number of US private equity groups in backing the Indian telecom and digital services business.

Mubadala said in a statement on Friday that it would acquire an almost 1.9 per cent stake in Jio, becoming the sixth group in as many weeks to invest in the digital ambitions of Asia’s richest man.

US private equity firms Silver Lake, Vista Equity Partners, General Atlantic and KKR have all taken stakes in the group since Facebook invested $5.7bn in April. Reliance Industries, Mr Ambani’s conglomerate, has now sold 19 per cent of Jio for around $11bn.

The Abu Dhabi Investment Authority is also in talks to invest $750m in Jio, according to two people familiar with the matter.

The Financial Times previously reported that Mubadala was considering taking a stake of up to $1.2bn in Jio and that Saudi Arabia’s Public Investment Fund is also in discussions to invest about $1.5bn in the company.

Launched in 2016, Jio used funds from Reliance’s oil refining business to offer aggressively discounted 4G mobile contracts to establish a major share of India’s telecom market. From that base, it has branched out into a growing suite of digital services like broadband and ecommerce.

The company has about 388m subscribers as it seeks to become India’s answer to dominant internet groups such as Alibaba in China. Mr Ambani has said he plans to publicly list Jio shares within five years but has not specified a venue.

The coronavirus pandemic has presented an opportunity for sovereign wealth funds such as Mubadala. The Gulf investor has seized on the disruption caused by coronavirus to explore a number of financial opportunities around the world.

Jio is the latest addition to the growing technology portfolio of Mubadala, whose venture investment arm is based in Abu Dhabi and San Francisco. The $230bn fund’s forays into tech include a $15bn commitment to Japanese group SoftBank’s Vision Fund.

The flurry of international interest in Jio has come at an opportune time for Reliance, which faces a severe and protracted downturn in its oil refining and petrochemicals businesses. Demand for its oil products fell sharply as India and other countries locked down their economies to halt the spread of Covid-19.

Bringing in partners and investors is a vital part of Mr Ambani’s strategy to reduce Reliance’s net debt from over $20bn to zero by March next year. The company this week finished a $7bn rights issue, which was India’s largest ever.

“We have seen how Jio has already transformed communications and connectivity in India,” said Khaldoon al-Mubarak, Mubadala’s managing director. “With Jio’s network of investors and partners, we believe that the platform company will further the development of the digital economy.”

Shares in Reliance Industries rose 0.8 per cent on Friday.

Additional reporting by Andrew England in London