Saudi Arabia, Abu Dhabi Funds Close To Backing Jio Fibre In Mega Deals

Saudi Arabia, Abu Dhabi Funds Close To Backing Jio Fibre Assets In Mega Deals

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SUMMARY

Sovereign funds from Saudi and UAE are likely to invest nearly $1 Bn each in Reliance Jio Fibre assets

Qatar Investment Authority could also join in with an investment of $1.5 Bn

The investment would monetise Reliance’s fibre optic assets, held by Jio Digital Fiber

Middle East-based sovereign wealth funds Public Investment Fund (PIF) from Saudi Arabia and UAE’s Abu Dhabi Investment Authority (ADIA) are reportedly in talks with Reliance Industries (RIL) to invest as much as $1 Bn each in Jio’s Fibre assets.

The Economic Times report suggests that the investment would monetise Reliance’s fibre optic assets, which are held by Jio Digital Fiber. With over 700K Km of fibre optics across India, Reliance Jio Digital Fiber is one of the largest networks with plans to expand capacity to 1.1 Mn Km.

According to earlier media reports, the sovereign wealth fund Qatar Investment Authority may also invest $1.5 Bn in Reliance’s Jio Fibre assets. Neither Reliance nor any of the prospective investors have officially commented on the deals at this moment.

Reliance started divesting its fibre assets by selling stake in the telecom towers business to Canada’s Brookfield in 2019 for Rs 25,215 crore (nearly $4 Bn). The Mukesh Ambani-led company had also transferred its tower and fibre assets to two special purpose vehicles (SPVs) owned by InvITs or infrastructure investment trusts.

InvIT is a mechanism that enables developers of infrastructure assets to monetize them by pooling multiple projects under a single entity or a trust structure. InvITs are long-term instruments structured as funds with a very long tenure or open-end structure.

Reliance was also in talks with ADIA-led consortium of GIC of Singapore and an infrastructure-focused fund ‘I Squared Capital’ last year, but discussions fell through over differences in commercial and operating terms between the two entities. But talks with ADIA were revived post its investment in Reliance Jio.

Both ADIA and PIF invested in Reliance Industries’ digital venture Jio Platforms. ADIA owns 1.16% stake for $750 Mn (INR 5,683.50 Cr), while PIF owns 2.32% stake for $1.49 ( INR 11,367 Cr). The two entities have invested $2.22 Bn in Jio Platforms of the total $20.8 Bn raised by the company from 15 marquee investors in a span of three months. The fibre optic investment deal could further strengthen ties between the Middle East and India.