Inside a $5.7 billion deal: Coronavirus couldn’t logout Facebook & Reliance from Project Redwood

“Can I catch up on some sleep just for a few hours,” was the primary message Anshuman Thakur typed to a senior colleague round on midday proper after he completed a media name with Ajit Mohan, Facebook’s head in India.

Thakur, a former telecoms rainmaker at NM-Rothschild-and-Morgan Stanley-turned-head of Strategy and Planning at Reliance, had been up on the telephone since four am, advantageous tuning the ultimate raft of paperwork hours earlier than Facebook introduced its strategic $5.7 billion partnership with Reliance early on Wednesday early morning.

A muggy Mumbai evening coupled with the thrill of bringing dwelling a deal that has been on the works for over a yr made it equally onerous to modify off completely within the closing hours. And this was by far probably the most excessive profile deal of Thakur’s profession. The proven fact that it was getting baked bang in the course of a world pandemic had added to the complexity.

And reality be instructed Corona had tripped up the plans. Well nearly.

Meet At Menlo Park Stands Cancelled

Thakur was to fly to Facebook’s headquarters at Menlo Park alongside along with his bankers, legal professionals and colleagues on 16th of March to begin essential negotiating along with his Facebook counterpart Raj Singh after the non-binding time period sheet received signed in January.

A secret code title – Project Redwood — was additionally conjured up for the core deal workforce of round 30, maybe in sync with its deep California join. Just like Sycamore, Sequoia or Oregon Ash, Box and White Adler, Redwood is a in style tree to native California, dwelling to Facebook.

The Silicon Valley poster boy final September additionally had expanded its company dwelling spending a billion {dollars} with a 525,000 square-foot new swanky constructing constructing referred to as MPK 21, that was designed by architect Frank Gehry to seat about 3,000 workers. The redwood forest in a courtyard and the three.6-acre rooftop backyard together with a tiered out of doors amphitheater akin to a botanical backyard had etched deep resonance to many.

But immediately the world was below lockdown. Skies had been getting shut, borders sealed. The dreaded pandemic was everwhere.

Till then it was comparatively easy. Legal, tax dilligence had begun in full earnest by February below the watchful eyes of RIL outdated hand Okay Raja Ramachandran. Commercial deal was accomplished prior. By then, legal professionals — AZB and Davis Poke for Reliance, Shardul Amarchand Mangaldas and Hogan Lovells for Facebook had joined tax auditors PWC and the 2 lead bankers Morgan Stanley and Bank of America Merrill Lynch.

Reliance and their advisors at Morgan Stanley, led by Michael Grimes, their world co-head expertise funding banking had opened up the information room round second week of March. From India, telecoms-media-technology banker Kamal Yadav was appearing because the pointsman on floor however a head to head assembly was completely important “to connect the dots and cross the tees.”

Thakur didn’t communicate to ET for this story that was pieced collectively after speaking to no less than half a dozen individuals who had been instantly concerned.

A Virtual Project Redwood

The lockdown immediately threw the whole lot out of drugs. “Only VCs were the way out,” mentioned an official concerned. The first such “virtual meeting” after the aborted March assembly occurred across the weekend earlier than Prime Minister Modi introduced a nationwide lockdown on March 25th.

“The aim was to make the announcement by March 31st.” quipped one other deal insider. “That did not happen but we are not far out either.”

Reliance too wanted some excellent news. For seven years chairman Mukesh Ambani had been on a $100 billion spending spree increasing petrochemicals and constructing out the world’s largest 4G telecoms community. But a bloated stability sheet was changing into a headache. A cope with Aramco has been nonetheless hanging as is its $eight billion Brookfield InvIT transaction.

A brand new expertise accomplice for Jio to leverage the commerce and retail spine that Reliance was banking on to interrupt the financial institution was the correct medication the physician had ordered.

Preliminary discussions with Google had additionally taken place however the search large wished a chunkier commerce and larger rights. It fell via early on.

Zoom Calls & Blue Jeans

What adopted was weeks of intense dealmaking through video conferencing through Blue Jeans and Zoom regardless of the time distinction between Mumbai and California.

“Manoj Modi would only come in to fill in the big strategic issues. Even on Facebook side, they would circle back with Zuk (Zukerberg),” mentioned one other official. “Once at around 8 am IST and again around 9 PM IST, we would regroup to thrash out the nitty gritty,” mentioned officers within the deal workforce. “Afternoons would be relatively free or would wrap up outstanding issues.”

Even then, uncertainties on the worldwide macro image loomed ominously within the backdrop. Facebook was satisfied about the long run strategic match however “all of a sudden, discussions on valuations also included the impact of the lockdown on business, turnaround timelines what happens if the lockdown continues,” added one other official.

Deal Dynamics

Morgan Stanley had got here into the image within the second half of final yr having missed out on the Aramco mandate. The Wall Street financial institution had suggested Sony final yr when Zee Entertainment was in play. That deal fell aside however Morgan received Sony to speak to Reliance to merge the leisure enterprise as effectively. That deal can be within the closing laps.

But sources say Mukesh Ambani and Mark Zukerberg had initially toyed with the thought of a collaboration nearly 14 months again. Gen Next Akash and Manoj Modi, Mukesh’s consigliere, had been additionally a part of the A Team to entrance the dialogue. Ajit Mohan’s appointment as an MD and Country Head in India, added heft to their presence and reaffirmed the dedication.

“No longer would anyone blame us for not investing enough dollars in India,” quipped an official. “This cheque should silence many.”

―Newsclick