Canadian investment firm Brookfield Asset Management has agreed to invest Rs 25,215 crore in a trust that controls Reliance Industries' telecom tower infrastructure assets, the companies said Friday.
This is the second investment this year that Brookfield is making in a venture controlled by richest Indian Mukesh Ambani. In March, it had agreed to buy the loss-making East-West Pipeline Ltd (EWPL), earlier known as Reliance Gas Transportation Infrastructure Ltd, for an enterprise valuation of Rs 13,000 crore from Ambani, chairman of Reliance Industries Ltd (RIL).
Earlier this year, Reliance had demerged the fibre and tower businesses into Jio Digital Fibre Pvt Ltd and Reliance Jio Infratel Pvt Ltd, respectively. As much as Rs 1.07 lakh crore of debt too moved to these companies. Reliance is also holding parallel negotiations for a similar monetisation exercise for its 7,00,000 route km fibre network.
RIL's telecom arm, Reliance Jio Infocomm Ltd previously held the tower business. It had over 1,70,000 mobile signal transmitting telecom masts, the largest in the country ahead of 1,63,000 towers owned by Bharti Infratel and Indus, and had plans to ramp up the count to 2,60,000.
Brookfield, along with co-investors, will invest in the units proposed to be issued by Tower Infrastructure Trust sponsored by RIL's wholly-owned unit Reliance Industrial Investments and Holdings Ltd (RIIHL).
"We moved the tower and fibre assets into the Invit, now we have the Brookfield who has come in to invest more than Rs 25,000 crore. This will be the largest foreign investment from an indian infrastructure standpoint. it also validates the value creation which we spoke of by spinning off passive infra.
"With Rs 25,000 cr, they will buy out 100 per cent of the equity of the operating tower company and they can inject balance amount into the operating company through debt," RIL Joint CFO V Srikanth said.
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This is the single-biggest private equity transaction in India.
The deal is subject to various conditions, including receipt of requisite government and regulatory approvals, RIL said in a regulatory filing.
RIIHL is the sponsor of the trust, and the trust currently holds 51 per cent stake in Reliance Jio Infratel Pvt Ltd. RIL itself held 49 per cent stake of Reliance Jio Infratel. Post the transaction, Brookfield will completely own the Tower Infrastructure Trust, though RIIHL will be a sponsor.
"All the dues that RIL has to the tower company will get repaid, that is 12,000 crore.
"We had invested in the towers and we have now exited the towers, meaning we have now been able to sell it and realise the (value) and same thing we will do for fibre," Srikanth said.
Of the overall proceeds, Rs 12,000 crore will go to Reliance Group in lieu of financial liabilities owed by RJIL to it.
RIL filing said the proceeds from the investment by Brookfield will be used to repay certain existing financial liabilities of Reliance Jio Infratel and to acquire its 49 per cent stake in the tower company.
"RIIHL, a wholly-owned subsidiary of RIL, has entered into an agreement with BIF IV Jarvis India Pte Ltd, an affiliate of Brookfield Asset Management Inc (Brookfield) for an investment by Brookfield (along with co-investors) of Rs 25,215 crore in the units proposed to be issued by the Tower Infrastructure Trust," the filing said.
The March deal was the first time a private pipeline is India was monetised. EWPL built and operates a 1,480-km pipeline from Kakinada, the landfall point of the gas RIL produces from its Krishna Godavari basin fields in the Bay of Bengal to Baruch in Gujarat.