Brookefield Asset Management Proposes $3.4 Billion Stake In Jio Infratel Pvt. Ltd. Through Tower Infrastructure Trust, Finance and Home Ministry Clear The Deal

Jio Digital

Brookfield Asset Managementproposed to acquire a 252 billion rupees ($3.4 billion) stake in a trust that manages the wireless infrastructure of the nation’s biggest mobile phone service provider and the Government of India has approved the proposal, experts quote.

The people also said telecom industry has given a green signal to the Brookfield to take control of Reliance Jio Infratel PVT through tower infrastructure trust. The proposal was cleared by the Finance and Home ministries as well as the Central bank in July.

Sources close to the development said, the telecom licensor also approved a downstream foreign investment of Rs 105.35 crore for the acquisition of the remaining 49 percent equity in Reliance Jio Infratel Pvt Ltd (RJIPL) and heighten the foreign investment in the company to 100 percent. The market regulator SEBI has approved the deal separately with certain clauses.

The requirements for further increase in stakes encompass compliance with Infrastructure Investment Trusts (InvITs) regulations, investment of Rs 25,215 crore by Brookfield and other investors and compliance with RBI guidelines, among others. The DoT’s approval is also subject to foreign investors not being provided any assured return on exit.

Reliance Industries on July 19, 2019, disclosed that Canada’s Brookfield Infrastructure Partners L.P. and its affiliates will invest Rs 25,215 crore ($3.66 billion) in the telecom tower assets of the Indian conglomerate. This multi-stage deal to acquire Reliance Jio lnfratel’s tower unit marks it as the single-biggest private-equity deal ever in India.

Under the deal, Reliance Industrial Investments & Holdings, the sponsor of Tower Infrastructure Trust, would issue units in the trust to Brookfield affiliate BIF IV Jarvis India and some co-investors. After the deal is closed, the Canadian alternative assets manager, Brookfield and its partners would become the sponsors of the trust, holding 100 percent of India’s biggest telecom tower firm with 170,000 towers through Tower Infrastructure Trust, while the subsidiary of Reliance Industries RJIPL, will become a co-sponsor, even though, they hold no units.

Boost to Reliance

“Proceeds from the investment by Brookfield and long-term loans will be used to repay existing financial liabilities of RJIPL, including loans extended by Reliance”, RIL said in the regulatory filing while presenting the company’s unaudited financial results.

“The 12000 crores dues that RIL has to the tower company will get repaid. RIL has invested in the towers and has now exited the towers, meaning the company have now been able to sell it and realise the (value) and the same thing they will do for fibre.

“This is a significant step forward in optimizing the capital structure of the digital and infrastructure businesses. The transaction validates the value unlocked through the spin-off of passive infrastructure assets of Jio through the InvIT structure,” RIL said in a press release.

“Proceeds from the investment by Brookfield will be used to repay certain existing financial liabilities of RJIPL and acquiring the balance 49 percent of the equity share capital of RJIPL, currently held by RIL

Reliance Jio Infocomm Ltd., which previously held under RIL’s telecom services arm, had demerged the tower and fibre businesses in the quarter ended March 30, 2019, into Jio Digital FibrePvt Ltd and Reliance Jio Infratel Pvt Ltd, respectively.

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