Saudi Arabian PIF looks to invest up to $1B in fibre assets of Jio

Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), is reportedly in talks with billionaire Mukesh Ambani-controlled Reliance Industries (RIL) to pump in around $1 billion (about Rs 7,500 crore) in Reliance Jio fibre assets, adding to a stake purchase in Jio Platforms. It is worth mentioning here that PIF had earlier announced an investment of Rs 11,367 crore in Jio Platforms—the digital assets unit of RIL.

The Saudi Arabian sovereign wealth fund started negotiations after rival Abu Dhabi Investment Authority (ADIA) re-engaged with Jio on a similar proposal to infuse approximately $1 billion in its pan-India fibre assets, people with knowledge of the matter said.

PIF, is believed to be in the process of reorganising its $300 billion portfolio—earning profits from its massive Silicon Valley, Big Oil and aviation bets and pulling out from English Premier League club investments. It has been reported that PIF has infused $7.7 billion in global equities in the first quarter. Plus, it has stakes in Uber Technologies and a $45 billion allocation to SoftBank’s Vision Fund.

Both PIF and ADIA have invested a total of around $2.2 billion to Jio Platform’s $20.8 billion fundraise that witnessed 13 global investors, led by social media behemoth Facebook, coming on board in a span of a couple of months.

The financial quoted a long-time Ambani family associate familiar with the matter as saying, “Saudi Aramco is already negotiating to invest in Reliance’s refining and petrochemical business. From a pure vendor arrangement between an oil producer and a refiner, both Crown Prince Mohammed bin Salman and (RIL Chairman) Mukesh Ambani want to cement their association as strategic partners.” Sources, however, said the ongoing negotiations may not translate into a deal.

In 2019, after signing binding agreements with Canadian asset manager Brookfield Infrastructure Partners for an investment of Rs 25,215 crore (around $4 billion), RIL’s attempts to unlock value in its fibre assets were part of an asset-monetisation plan to trim debt. The oil-to-telecom conglomerate had transferred its tower and fibre assets to two separate infrastructure investment trusts (InvITs).

Late last year, these discussions were stalled due to lack of consensus on commercial and operating terms between RIL and ADIA-led group that included I Squared Capital, an infrastructure focussed fund, and GIC of Singapore. At stake was a controlling stake of pan India fibre InVIT—Jio Digital Fibre. At the time, Mukesh Ambani’s family office had also proposed to co-invest. The tower trade has not yet received regulatory approvals, the publication mentioned.

“The re-engagement has given that extra nudge to PIF. The prolonged trend of work from home, schooling, entertainment from home has catalysed a shift in consumer preference, which in turn makes the investment thesis stronger in a country that is already among the most under-penetrated in Asia broadband connectivity,” one of the persons cited above told the daily.

Fixed broadband penetration in India is at only 6% as compared with 70% in Eurozone and 80% in Japan, according to domestic rating agency Crisil report. Sirf News