Business Tycoon and World’s leading telecom entrepreneur from India, Mukesh Ambani announced that Reliance Industries is now net-debt free months ahead of its March 2021 target after raising a record Rs 1.69 lakh crore from stake sales and rights issue in less than two months time.
Reliance secured over Rs 1.15 lakh crore from global tech investors including Facebook by selling a little less than a quarter of its digital business and raised Rs 53,124 crore selling shares to existing investors in the past 58 days. Taken together with last year’s sale of 49 per cent stake in fuel retailing venture to BP Plc of UK for Rs 7,000 crore, the total fund raised is in excess of Rs 1.75 lakh crore, the company said in a statement. Reliance had a net debt of Rs 1,61,035 crore as on March 31, 2020.
“With these investments, RIL has become net-debt free,” it said. “I have fulfilled my promise to the shareholders by making Reliance net debt-free much before our original schedule of March 31, 2021,” said Ambani, 63, who raised record funds amid coronavirus pandemic.
After a planned USD 15 billion stake sale in his oil-to-chemical business to Saudi Arabian Oil Co got delayed, he set out to prove skeptics wrong by luring partners to Jio Platforms Ltd, which houses India’s biggest telecoms firm by subscribers, Reliance Jio. With more than 388 million users, Jio has forced out several rivals and driven consolidation in the sector since entering the market in 2016 with free voice services and cut-price data. Sale of stake in Jio Platforms raised Rs 1,15,693.95 crore from leading global investors including Facebook, Silver Lake, Vista Equity Partners, General Atlantic, KKR, Mubadala, ADIA, TPG, L Catterton and PIF since April 22, 2020.
Saudi Arabian sovereign wealth fund PIF buying 2.32 per cent stake in the unit for Rs 11,367 crore on June 18 “marks the end of Jio Platforms’ current phase of induction of financial partners,” the statement said. Alongside, Reliance had launched India’s biggest right issue, which was subscribed 1.59 times.
Though the rights issue size was Rs 53,124 crore, the company has got only 25 per cent of the money as the remaining is to be paid only next fiscal.
While only a quarter of the rights issue has accrued to the company, banks treat residual amounts of a partially paid rights issue to release corresponding short-term debt, if needed. Also, cash profits of the last two quarters has not been factored in the calculations.
Ambani had at the company’s annual general meeting on August 12, 2019 announced a roadmap for Reliance to become a net-debt free company before March 31, 2021.
“We have a very clear roadmap to becoming a zero net debt company within the next 18 months that is by March 31, 202,” he had said last year highlighting strong interest from strategic and financial investors in consumer businesses, Jio and Reliance Retail.
In the statement on Friday, he said he was both delighted and humbled to announce the fulfillment of the promise.
“Exceeding the expectations of our shareholders and all other stakeholders, again and yet again, is in the very DNA of Reliance,” he said.
“Therefore, on the proud occasion of becoming a net debt-free company, I wish to assure them that Reliance in its Golden Decade will set even more ambitious growth goals, and achieve them,” he said.