Last month we covered the articles describing the commercial aspects of Facebook & other global leading Private Equity firm’s investment in Reliance Jio. In this article, we will try to evaluate how Reliance Industries Limited (RIL) built Jio (financially) and re-structuring it did before finally going for fundraise. We have tried to divide the article into three parts:

  1. How RIL financed all the Jio Operations
  2. Re-Structuring before stake dilution
  3. Value creation with minimal leakage

No introduction is required for Reliance Industries Limited (“RIL”). However, in brief, it is India’s largest private sector company. RIL’s activities span hydrocarbon exploration and production, petroleum refining and marketing, petrochemicals, retail and digital services.

Reliance Jio Infocomm Limited (“RJIL”), a step-down subsidiary of RIL, has built a world-class all-IP data strong future proof network with latest 4G LTE technology.

Jio Platforms Limited (JPL), a WoS of RIL, created to transfer its investment in RJIL. JPL is currently a holding company for RJIL.

Current Structure:

Reliance-Industries-Jio-Restructuring-Fund-Raising-1

Part A: Unfolding funding History of Jio

It was never a smooth ride for Reliance group to create a Telecom/digital behemoth of India. In this roller coaster ride, RIL as a group did multiple re-structuring/ collaboration. 

In 2013, RIL changed the name of its earlier acquired subsidiary Infotel Broadband Services Limited to Reliance Jio Infocomm Limited. During FY 2010-11, RIL acquired a 95% stake in the equity of Infotel Broadband Services Limited.

In 2013, RIL infused INR 2647 crore in RJIL in the form of 9% Cumulative Non-redeemable Preference Shares.

In 2013-14

During years 2013-14, Reliance Jio Infocomm Limited raised financing from banks and other institutions to part finance the capital expenditure.

During the year, RIL’s investment in equity shares of RJIL increased by INR ~17,900 crore while investment in 9% Cumulative Preference Shares became nil as all 9% Cumulative Preference Shares including new issue made during the year were redeemed by the RJIL. However, 0.1% Non-Cumulative Redeemable Preference Shares held by Reliance Industrial Investments and Holdings Limited (RIIHL), a wholly owned subsidiary of RIL amounting to INR 125 crore remained unchanged.

RJIL also merged Infotel Telecom Limited, Rancore Technologies Private Limited with RJIL.

In 2014-15

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