MUMBAI: Reliance Industries Ltd (RIL) on Friday said it has entered into a deal with Brookfield Asset Management’s associate BIF IV Jarvis India for Rs 25,215 crore investment in the Tower Infrastructure Trust of its wholly owned subsidiary Reliance Industries Investments & Holdings Ltd (RIIHL).
Brookfield would, in effect, own 100 per cent in the Tower InvIT, while RIIHL would continue to be a co-sponsor of the InvIT along with Brookfield. RIL had in March moved its tower and fiber assets to two separate InvITs to unlock value and also help it reduce debt.
“This is the single largest foreign investment in an Indian infrastructure vehicle and is a testimony from one of the largest infrastructure players globally, for the quality of assets created by Jio. This is also a significant step forward in optimising the capital structure of the digital and infrastructure businesses,” RIL said. The transaction validates the value unlocked through spin-off of passive infrastructure assets of Jio through the InvIT structure.
The deal puts the enterprise value of the tower assets at Rs 55,000 crore and the subscription to the units of Tower InvIT by Brookfield now would see return of Rs12,000 crore to RIL dues from the tower business, said V Srikanth, joint chief financial officer.
The deal, he said, is a “testimony to the quality of the asset, that too from a very, very strong player like Brookfield. This is only the tower side. We are very much in discussion on the fibre asset (side) too”.
Separately, RIL’s consolidated net profit for the first quarter of the financial year 2019-20 rose 6.8 per cent on year to Rs10,104 crore on the back of strong performance in the retail and digital businesses. Consolidated revenue rose 22 per cent on year to Rs172,956 crore.
RIL said it had record EBIDTA (earnings before interest, depreciation, taxes and amortisation) in the retail and digital businesses, and consumer business now accounts for nearly 32 per cent of segment EBIDTA. Retail now has 10,644 stores, and Jio has a subscriber base of 331.3 million.
However, refining and petrochemicals faced the headwinds of global oil prices, geo-political issues dragging down the gross refining margins to $8.1 a barrel. Petrochemical EBIDTA was marginally down with 5.4 per cent lower volumes on planned turnarounds. “There have been a lot of moving parts across. From our point of view, thanks to the level of integration of refining and petrochemicals, a lot of this volatility has got absorbed without any meaningful impact on our earnings,” Srikanth said.