Reliance says it’s net-debt free after $15b Jio deals

Bloomberg

Reliance Industries Ltd, the conglomerate controlled by Asia’s richest man, said it has become free of net debt months ahead of a March 2021 target after raising more than $23 billion from stake sales and a rights issue. Its shares closed at an all-time high.
India’s most valuable company said in a statement that it secured 1.16 trillion rupees ($15.2 billion) by bringing investors including Facebook Inc and a slew of funds into the digital business at the heart of chairman Mukesh Ambani’s ambition to transform his energy-led empire. Reliance also completed a 531.2-billion rupee share sale to existing shareholders and sold a stake in its energy business to BP Plc.
The 63-year-old tycoon, who made a pledge to shareholders in August to slash the group’s net debt to zero within 18 months, went on a fundraising spree starting late April, despite India being under coronavirus lockdown. Ambani set out to prove skeptics wrong by luring partners to Jio Platforms Ltd, a technology venture he’s using to pivot Reliance towards e-commerce and digital payments. “It’s an amazing lockdown achievement,” said Chakri Lokapriya, chief investment officer at TCG Asset Management in Mumbai.
“The move tells investors that Reliance is transforming the company’s growth engine to a technology platform.”
Reliance said that it had racked up net debt of 1.6 trillion rupees as of March, most of it for rolling out its wireless carrier, Reliance Jio Infocomm Ltd, which became India’s biggest within three years of its 2016 debut. Reliance’s shares surged 6% to end at an all-time high, taking the company’s market value to $151 billion.
“I am both delighted and humbled to announce that we have fulfilled our promise,” Ambani said in the statement.
To be sure, three quarters of the money from the $7 billion rights issue will accrue in the fiscal year starting from April 1, 2021. That’s because shareholders had to pay only 25% — or 314.25 rupees a share — on application. The next installment of 314.25 rupees is due in May next year, with the remainder slated for November 2021.
“Leave aside the rights issue, money committed to Jio is real, not indicative or some term sheet,” Lokapriya said.