Reliance Industries said that Canada’s Brookfield Investment Firm and its affiliates will invest Rs 25,215 crore ($3.66 billion) in telecom tower assets of the Reliance Industries Ltd’s telecom tower assets in the single biggest private equity deal ever in India.
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The Canadian firm Brookfield Investment Firm has significant investment in India and want to establish a foothold in India’s telecom tower segment for the past few years. These include a Rs. 30 Crores ($300 million) transaction in 2017 in the largest private equity buyout deal in the roads sector and in the hospitality sector, Brookfield signed earlier this year to acquire four Leela Hotels for Rs. 57.6 Crores. This deal is yet to pass regulatory muster and has been challenged by ITC Ltd and Life Insurance Corp, the hotel company’s minority shareholders.
Reliance Industries informed the stock-exchange that Brookfield and its co-investors will put the money in the units to be issued by a Tower Infrastructure Trust, an infrastructure investment trust (InvIT).
The trust, which is sponsored by RIL’s wholly owned unit Reliance Industrial Investments and Holdings Ltd, holds a 51% stake in telecom tower operator Reliance Jio lnfratel Pvt. Ltd. RIL itself owns 49% of Reliance Jio lnfratel. The tower business was previously held under RIL’s telecom services arm, Reliance Jio lnfocomm Ltd. The business was transferred to Reliance Jio lnfratel by the end of March.
RIL said, the proceeds from Brookfield’s investment will be used to repay certain existing financial liabilities of Reliance Jio lnfratel and to acquire its 49% stake in the tower company. This is a significant step forward in optimizing the capital structure of the digital and infrastructure businesses. The transaction validates the value unlocked through spin-off of passive infrastructure assets of Jio through the InvIT structure, RIL said.
RIL said that its Reliance Jio Infocomm unit reported a net profit of Rs 891 crore for the April-June period on revenue of Rs 11,679 crore. Brookfield’s investment is subject to conditions precedent, including receipt of requisite government and regulatory approvals, RIL.