Abu Dhabi's Mubadala in talks on $1 billion stake in Reliance's Jio Platforms: sources

NEW DELHI/DUBAI/HONG KONG (Reuters) - Abu Dhabi state fund Mubadala is in talks with Reliance Industries RELI.NS about investing around $1 billion in the Indian conglomerate's Jio platforms, three sources told Reuters.

FILE PHOTO: A woman checks her mobile phone as she walks past a mobile store of Reliance Industries' Jio telecoms unit, in Mumbai, India, July 11, 2017. REUTERS/Shailesh Andrade/File Photo

Twitter TWTR.N is separately also in talks with Mumbai-based Reliance to invest more than $1 billion in the digital start-up, which houses music and movie apps as well its telecoms venture Jio Infocomm, another source added on Thursday.

“Clearly Jio’s platform is attracting a wide range of world-class investors, given its enormous potential to serve one of the world’s largest marketplaces,” Mubadala said in an email, without confirming whether or not talks were taking place.

Due diligence on a potential transaction with Reliance was already underway, one of the sources said.

If it goes ahead, the Jio Platforms investment would be the largest in an Indian firm by Mubadala, which is the second-biggest state investor in Abu Dhabi after Abu Dhabi Investment Authority (ADIA), managing about $240 billion in assets.

Reliance and Twitter did not respond.

Jio Platforms has so far already agreed to sell a combined stake of just over 17% through five separate deals with Facebook FB.O, which spent $5.7 billion on 9.99%, the first to announce its investment in April.

While talks may be taking place with multiple parties, deals may not necessarily materialize and any terms may change, a fourth source, who is familiar with Reliance’s strategy, said.

All four sources declined to be identified because the talks are private.

Reliance plans to wrap up a bulk of the private fundraising by the third quarter of 2020 and then explore a potential public listing in the United States in 2021, one of the sources said.

Both Morgan Stanley MS.N and Goldman Sachs GS.N are in talks with Reliance about a possible Jio Platforms IPO mandate, the source added.

Reliance executives visited the United States in February to meet potential investors and bankers and it was looking for a valuation of $90 billion to $95 billion, the source said.

However, the source familiar with Reliance’s strategy said that an overseas listing could still be a long way off and that the company had no immediate need for funds after the recent investments in Jio Platforms.

Before making any decision Reliance would also need to have clarity on rules governing direct overseas listings for Indian companies, which are still being formulated by the government.

Global tech firms prefer listing in the U.S. as it provides companies with greater liquidity and wider access to capital.

Such a deal would help boost Jio Platform's credentials and provide an exit for some of the big investors that have agreed to invest in it, including private equity firms KKR KKR.N, General Atlantic, Silver Lake and Vista Equity Partners.

India’s Mint newspaper reported on Thursday that Microsoft is also in talks to buy 2.5% of Jio Platforms for $2 billion.

Talks between Reliance and Microsoft had been on since the two companies announced a cloud computing tie-up last year, a fifth source told Reuters.

Reliance is looking to sell roughly 20% of Jio Platforms through all the private placement deals, the source added.

Morgan Stanley declined to comment, while Microsoft, Goldman Sachs did not respond to requests for comment.

Reporting by Sankalp Phartiyal in New Delhi, Saeed Azhar in Dubai and Sumeet Chatterjee in Hong Kong; Additional reporting by Aditya Kalra in New Delhi, Anirban Sen in Bengaluru and Kane Wu in Hong Kong; Editing by David Goodman, Euan Rocha and Alexander Smith