RIL shares zoom over 10% on Rs 43,574-cr Jio-Facebook deal; market cap rallies Rs 80,710 cr

New Delhi: Shares of Reliance Industries on Wednesday jumped over 10 percent after Facebook announced an investment of $5.7 billion (Rs 43,574 crore) to buy a 10 percent stake in Jio Platforms.

The scrip of the country's most valued firm by market cap advanced 10.30 percent to close at Rs 1,363.35 on the BSE. During the day, it surged 12 percent to Rs 1,384.70.

On the NSE, shares of the company zoomed 9.83 percent to close at Rs 1,359.

It was the top gainer on both the 30-share BSE Sensex and NSE Nifty-50.

Representational image. Reuters.

In traded volume terms, 26.30 lakh shares were traded on the BSE and 6.5 crore shares on the NSE during the day.

The company's market valuation also jumped by Rs 80,710.7 crore to Rs 8,64,267.70 crore.

Earlier in the day, Facebook announced an investment of $5.7 billion (Rs 43,574 crore) to buy a 10 percent stake in the firm that houses billionaire Mukesh Ambani''s telecom arm Jio as the social media giant looks to expand presence in its largest market in terms of subscriber base.

"Today we are announcing a $5.7 billion, or Rs 43,574 crore, investment in Jio Platforms Ltd, part of Reliance Industries Ltd, making Facebook its largest minority shareholder," the company said in a statement.

Reliance in a separate statement said the investment by Facebook values Jio Platforms at Rs 4.62 lakh crore pre-money enterprise value ($65.95 billion, assuming a conversion rate of Rs 70 to a US dollar).

"Facebook's investment will translate into a 9.99 percent equity stake in Jio Platforms on a fully diluted basis," it said.

Jio Platforms, a wholly-owned subsidiary of Reliance Industries Ltd (RIL), houses digital services of the group. Reliance Jio Infocomm, is a wholly-owned subsidiary of Jio Platforms.

The Facebook deal is part of value unlocking by RIL to cut debt. RIL has been seeking strategic partnerships across its businesses while targeting to deleverage its balance sheet.

RIL was also the biggest contributor in Wednesday's market rally where the 30-share BSE index rose by 742.84 points or 2.42 percent to close at 31,379.55.

"RIL had restructured its digital business into one consolidated wholly-owned subsidiary - Jio Platforms - which would host all the digital initiatives of the firm, including Jio digital services (mobile, broadband), apps, tech capabilities (AI, Big Data, IoT) and investments (like Den, Hathway)," Credit Suisse said in a note.

It said that Facebook's investment into this entity will further Reliance Industries' digital initiatives and will help in deleveraging.

"...The deal will aid in achieving net debt-free (target) by March 2021. As of 31 December, 2019, net debt for the group stands at Rs 1,531 billion (Rs 1.53 lakh crore) and with Facebook''s investment, this should put RIL on course to be net debt-free by Mar-2021," it said.

(Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd which publishes Firstpost)