RIL share prices jumps 8% on Facebook deal

Reliance Industries (RIL) share price rose over 8 percent in early trade on April 22 after social media giant Facebook announced an investment in the company’s telecom unit.

Facebook has bought a 9.9 percent stake in Reliance Jio for USD 5.7 billion (Rs 43,574 crore) in the telecom unit of RIL.

This deal gives the social media giant a firm foothold in a fast-growing massive market and helps the Indian oil-to-telecom conglomerate to significantly cut debt.

Reliance Industries, Jio Platforms and Facebook, Inc. today announced the signing of binding agreements for an investment of Rs 43,574 crore by Facebook into Jio Platforms, as per the company release.

This investment by Facebook values Jio Platforms at Rs 4.62 lakh crore pre-money enterprise value (USD 65.95 billion, assuming a conversion rate of Rs 70 to a US Dollar), it added.

Catch our entire coverage on the Facebook-Jio deal here

Jio said, “The partnership between Facebook and Jio is unprecedented in many ways. This is the largest investment for a minority stake by a technology company anywhere in the world and the largest FDI in the technology sector in India.

Our efforts with Jio will be focused on opening new doors and fueling India’s economic growth and the prosperity of its people, Facebook said.

RIL has in recent months accelerated efforts to reduce debt by attempting to sell stakes worth billions of dollars in some of its businesses. It is in talks with Saudi Aramco to sell 20 percent of its oil to chemicals business and Canadian private equity firm Brookfield Asset Management for a stake in its tower business.

According to Jefferies the deal implies a pre-money equity valuation of Rs 43,600 crore for Jio Platforms. The company also has Rs 41,000 crore of net debt on Jio Platforms’ balancesheet, reported CNBC-TV18.

The deal implies an enterprise value of Rs 47,700 crore and valuation implies a forward EBITDA of Rs 398-477 billion.

The valuations suggest that Facebook expects Jio’s EBITDA to double from current levels, it added.

Jefferies believes that the transaction sets benchmark valuation for any listing in the future for Jio Platforms.

At 09:18 hrs Reliance Industries was quoting at Rs 1,316.40, up Rs 80.35, or 6.50 percent on the BSE.