Facebook deal may keep RIL on road to zero-debt plan – Times of India


MUMBAI: The $5.7 billion (Rs 43,574 crore) investment by Facebook in Jio Platforms will help Mukesh Ambani deleverage Reliance Industries’ (RIL) balance sheet even as oil market uncertainties have cast a shadow on a potential multi-million-dollar investment by Saudi Aramco in its refining-to-chemicals business.
RIL’s debt has ballooned to $43 billion (Rs 3.06 lakh crore) following its aggressive entry into the telecom sector four years ago. It has invested more than Rs 3.50 lakh crore in building digital infrastructure which included splurging on acquisitions.
In the recent past, concerns were raised about RIL’s mounting liabilities but the company debunked those by saying it has a clear roadmap for debt reduction.
At the annual shareholder meet last year, Ambani announced plans to make RIL a “zero net debt” company by March 31, 2021. But, legal roadblocks, among other factors, have hindered his asset monetisation deals. Last August, RIL had said that it will complete the $15 billion investment by Saudi Aramco by March but a closure to the deal seems to be away.
Analysts believe that RIL is on track to reduce its net debt this fiscal after Jio Platforms’ deal with Facebook and its fuel retail joint venture (JV) with BP got the European Union regulator’s approval on Monday. RIL will receive Rs 7,000 crore from BP in lieu of the 49% stake in the JV and the deal is expected to be closed this quarter.
“The two transactions will accelerate RIL’s deleveraging story and give the company more time to work in closing other deals involving Aramco and Brookfield (in telecom towers),” said Narendra Solanki, head-equity research, Anand Rathi Shares & Stock Brokers. RIL is also looking to unlock value in its entertainment channel business and has held talks with Sony Corporation for the same.
RIL has a net debt of Rs 1.53 lakh crore ($20 billion) and according to foreign brokerage firm CLSA, the company’s net debt will come down by 20% in this quarter. “Leverage is getting more manageable and concerns around this should diminish,” wrote CLSA in its report post the Facebook-Jio Platforms announcement.
Of the total $5.7 billion investment by Facebook, Jio Platforms will retain $2.14 billion (Rs 15,000 crore), while the remaining $4.08 billion (Rs 28,574 crore) will be used to retire debt it owes to RIL.
“The Facebook deal will be a major cash boost for RIL since the current uncertainties in the crude oil market may cast a shadow on its deal with Aramco,” said Rajeev Shah, MD, RBSA Advisors.
Ambani had said last year that there is a strong investor interest in the retail business and will induct a partner before taking the unit public.



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