PIF, ADIA May Invest $1 billion In RIL’s Fibre InvIT

 

Saudi Arabia’s Public Investment Fund (PIF) and Abu Dhabi Investment Authority (ADIA) are likely to invest about $500 million (Rs 3,700 crore) each to acquire a total 51% in the infrastructure investment trust (InvIT) structure formed by Reliance Industries Ltd (RIL) to monetise its fibre optic network assets, said people aware of the matter.

Over 48% of the InvIT—Digital Fibre Infrastructure Trust (DFIT)—will be owned by various RIL entities, with the rest being held by high net worth individuals (HNIs), they said.

“ADIA and PIF are likely to bring $500 million each to take 51% of DFIT,” one of the persons aware of the development told ET.

The agreements are likely to be signed in the next few weeks.

“As a policy, we do not comment on media speculation and rumours and we cannot confirm or deny any transaction which may or may not be in the works,” RIL said in an email. “Our company evaluates various opportunities on an ongoing basis.”

An ADIA spokesman declined to comment, while PIF did not respond to queries. ET had reported earlier this year that both PIF and ADIA are in talks with RIL for investing in the fibre assets.

Overall, RIL plans to raise Rs 39,700 crore by monetising its fibre optic network assets housed in Jio Digital Fibre Private Ltd., which is 51% owned by DFIT and 48.44% by RIL, with the rest held by minority shareholders, according to documents filed with the Securities and Exchange Board of India (Sebi). DFIT plans to raise Rs 14,700 crore by issuing 1.47 billion units, priced at Rs 100 apiece to investors via a private placement. PIF and ADIA are likely to subscribe to part of this issue, one of the people said. As per the rules, DFIT’s sponsor Reliance Industrial Investments and Holdings Ltd. (RIIHL), wholly owned by RIL, needs to hold at least 15% of the units on a post-issue basis, locked in for three years.

DFIT will also raise an additional 25,000 crore by way of loans from local banks, including State Bank of India, HDFC Bank, Union Bank of India and ICICI Bank, said people aware of the developments. The banks didn’t respond to queries.

According to the Sebi filing, DFIT will eventually lend the entire Rs 39,706 crore to Jio Digital Fibre, which will use it to repay debt, including suppliers’ credit. The fibre optic unit, earlier a part of RIL’s telecom arm, Reliance Jio Infcomm, has a debt of Rs 87,296.3 crore, including suppliers’ credit.

While “DFIT’s filing document with Sebi highlights no large external investor for now, there is always the possibility of new external investors investing in the fibre trust at a later date,” JP Morgan said in a report.

HDFC Bank and SBI will have a larger share of the Rs 25,000 crore debt-raising exercise, said bank executives. The term loans could have maturities running into 12 or 15 years, they said, adding that the banks have committed to lend in their individual capacity without the likelihood of any syndication arrangement.

“We have sought assurance on repayments in these uncertain times and we believe a triple-A rated entity like RIL can offer that,” said the senior executive of a large bank that has extended a credit line to the fibre InvIT.

Jio Digital Fibre owns and operates a pan-India operational optic fibre cable network of approximately 17.37 million fibre pairs per kilometre (FPKM) as of March 31, 2020.

Sandip Ginodia , CEO

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