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Thu 31 Oct 2019 01:52 PM

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Abu Dhabi fund's plans to invest in Rio Digital Fibre hits hurdle

ADIA, I Squared Capital and GIC of Singapore have been negotiating to acquire controlling stake in the pan-India fibre assets of Reliance Jio

Abu Dhabi fund's plans to invest in Rio Digital Fibre hits hurdle

Talks between Abu Dhabi Investment Authority (ADIA), I Squared Capital and GIC of Singapore for a possible investment in Jio Digital Fibre, the pan India fibre network of Reliance Group’s telecom company, is understood to have hit a roadblock.

The talks with Mukesh Ambani-led Reliance Industries Ltd (RIL)  have stalled on differences in commercial and operating terms of the business, post a possible acquisition, according to a report in Economic Times.

When contacted, RIL spokesperson did not offer any comment on the issue.

Officials in the Reliance Group, however, told Arabian Business that talks have not broken down, and that “these are various phases in discussion where you go back and forth”.

Arabian Business has also contacted ADIA for a comment.

Industry sources said RIL was proposing a transaction structure, envisaging a 20-year sale and buyback with an assured return to ADIA and the two other funds.

The group is also said to have proposed Mukesh Ambani’s family office to co-invest in the company – Rio Digital Fibre - along with the prospective investors, to reaffirm his commitment to the business.

RIL is understood to have proposed an assured return of 9.5 percent on its equity contribution plus sharing of the revenue upside.

Half of the fibre capacity, as per the terms offered by RIL, was to be used by Jio for its own users, while the rest was meant for third party users.

ADIA and the other two funds were not agreeable to these propositions, as they wanted a greater commitment from Jio in terms of usage, the ET report said.

The Abu Dhabi wealth fund and the other two funds also wanted to have more operating freedom on governance and pricing flexibility in the fibre network company, in the aftermath of a possible acquisition deal.

After divesting its stake in its telecom towers business in a $3.7 billion deal, Reliance Group has been holding negotiations with investor groups to unlock value in the fibre network company.

The asset monetisation efforts are in line with Ambani’s recently announced plans to make the group debt free over the next 18 months.

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