ADIA redials RIL for investment of $1 bn in Jio Fibre | Economic Times

Mumbai: After putting $750 million (Rs 5,684 crore) to work in Jio Platforms, Abu Dhabi Investment Authority (ADIA) has revived its discussions with Reliance Industries to invest around a billion dollars in its pan-India fibre assets, said multiple people aware of the matter.The sovereign wealth fund has already secured one round of executive committee approvals and its board is expected to meet within the next few days to review the investment plans and possibly even take a final decision.Late last year, these talks were put in cold storage over differences in commercial and operating terms after an ADIA-led consortium of GIC of Singapore and I Squared Capital, an infrastructure-focussed fund, proposed to acquire a controlling stake in the InvIT — Jio Digital Fibre. ETin its October 31 edition had reported that the talks had hit a roadblock. After striking a deal for its towers, RIL’s efforts to unlock value in the fibre company were part of a series of time-bound asset monetisation initiatives.76844835However, with Facebook and a parade of investors putting in over $15 billion in Jio Platforms, ADIA and RIL are now back at the negotiating table. And unlike last year, as of now it is only ADIA that is actively pursuing the transaction for a significant minority stake of 20-25% in the InvIT. GIC is a co-investor with Brookfield to acquire Jio’s tower InvIT for Rs 25,215 crore ($4billion approximately), but that is yet to get a regulatory approval, a year after its announcement. Moelis, Citi and ICICI Securities are advising RIL while JP Morgan is working with ADIA.“The business case of Jio has changed and its digital plans based on three key pillars of commerce, content and carriage are already rolling out with subscribers coming on board. It’s easier to make an investment thesis now compared to six months before when it was still in an early rollout stage,” said an official involved in the negotiations on condition of anonymity as the talks are in the private domain. “This backbone would play a key role in the development of the 5G ecosystem in India.”Additionally, the trend of work/school/entertain from home due to the lockdown is driving demand for home broadband, particularly in emerging Asian markets where penetration remains low.Fixed line broadband penetration in India is less than 20%. Jio has invested in the largest network in the country in an effort to capture the potential broadband market which is expected to grow 2-5x in subscriber base.ADIA declined to comment. Mails sent to RIL remained unanswered till press time. In its FY20 annual report, RIL had said discussions with potential investors for fibre InvIT were in progress.The current negotiations are on the final yield structure and revenue upside from sales generated by third parties using the network, added the sources mentioned above. Once finalised, the final investment amount will be decided.RIL has always been keen to have deal contours similar to the tower transaction – a 30-year sale and buyback with an assured return to investors.In simple terms, this translates to Jio selling stakes in the network to the investors and buying it back after a designated time frame. The equity value of the fibre backbone is pegged at around $8 billion, excluding the liabilities. Reliance is believed to have offered a 9.5% assured return to potential investors on their equity contribution plus sharing of the revenue upside. In the past, 50% of the fibre capacity, as per the terms offered by RIL, was to be used by Jio for its own subscribers while the rest was meant for third-party users.