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Abu Dhabi Investment Authority, PIF invest $1b in Reliance’s fiber-optic assets

Reliance Industries Ltd. is raising $1 billion in investment from two sovereign wealth funds as investors double down on the consumer businesses of Asia’s richest man, who’s diversifying his conglomerate away from oil refining.

Abu Dhabi Investment Authority, or ADIA, and Saudi Arabia’s Public Investment Fund, or PIF, will each invest 37.8 billion rupees ($507.2 million) in buying units of Digital Fibre Infrastructure Trust, Reliance said in a post-earnings presentation on Friday. The company highlighted the “induction of strong partners” in what it called a “critical asset base.”

The latest fund infusion underscores the confidence of marquee investors in billionaire Mukesh Ambani’s plans to transform his conglomerate into a retail and technology behemoth and pivot away from its staple oil-refining business that he inherited after his father died in 2002. He has already secured over $25 billion investment from backers such as Facebook Inc. and Google.

Both ADIA and PIF are repeat investors in Ambani’s conglomerate after plowing billions in his digital and retail units earlier this year. A unit of ADIA announced plans to invest $750 million rupees in Reliance’s retail arm in October and $752 million in Jio Platforms Ltd. – group’s digital services unit – in June. PIF also said it’s investing $1.5 billion in Jio Platforms in June.

The diversification is also key to Reliance’s future. The conglomerate reported a drop in quarterly profit on Friday as it battled a plunge in demand for transportation and aviation fuels with the pandemic forcing people to stay home. The telecom and retail earnings cushioned the blow but couldn’t make up for the hit in oil refining and petrochemicals that contributed almost 73% to Reliance’s revenues for the year ended March.

Reliance Industries, in its annual report in June, had mentioned ongoing talks with potential investors for buying into the trust holding fiber assets. The group owns a network of 1.1 million kilometers of fiber optic cable across India that penetrate over 1,600 Indian cities and towns.

The trust holding Reliance’s fiber-optic assets said in an exchange filing earlier this month that it was raising 397.1 billion rupees through borrowings and stake sales to group units.

The investment in fiber-optic assets follows the spate of deals in Reliance’s digital, retail and mobile-phone tower assets. Reliance had previously sold stakes in a separate investment trust that held the group’s wireless tower assets to Brookfield Asset Management Inc. Bloomberg

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