Government gives nod to Rs 25,215 crore Reliance Jio-Brookfield tower deal

The government gave a green signal to the Rs 25,215 crore Reliance Industries-Brookfield tower deal a year after it was announced, with the caveat that the transaction must follow foreign exchange rules and regulations and norms for infrastructure investment trusts (InvITs).

The investment is in the form of over Rs 105 crore in equity and the remainder as debt.

“The investment of Rs 252,150 million by the Brookfield Sponsor and other investors into the Trust by way of the issue should be in compliance with applicable FEMA rules and regulations and the InvIT Regulations; and (c) the Rs 250,000 million trust loan to be provided by the trust to the Tower Co. should be in compliance with extant provisions of law,” Tower Infrastructure Trust said in a filing to the Securities Exchange Board of India.

DoT’s approval is also subject to three conditions – foreign investors won’t get an assured return on their exit; compliance with pricing guidelines, documentation and reporting requirement of the Reserve Bank of India, and compliance with other applicable laws. 

As reported on June 15, the home ministry approved the equity part of the deal and asked DoT to seek the opinion of Sebi, the market regulator, on whether the debt-equity ratio was compliant with its guidelines for InvITs.

The approval came after Reliance Industries clarified doubts raised by DoT, Sebi and the home ministry over issues such as why just over Rs 100 crore of the Rs 25,215 crore to be invested by Brookfield and its co-investors is further being put into Reliance Jio Infratel in the form of equity, with the balance being in the form of debt.

“Each investor will invest in units of Rs 100 per unit and will receive his proportionate share of units based on the amount of his investment. It has been explained that the Brookfield sponsor has categorically stated that there are no contradictory facts in their responses. The specific clarifications sought have been provided,” according to the filing.

In the deal announced in July 2019, Reliance Industrial Investments & Holdings, a wholly owned Reliance Industries unit and the sponsor of Tower Infrastructure Trust, would issue units in the trust to Brookfield affiliate BIF IV Jarvis India and co-investors for Rs 25,215 crore. Brookfield and its partners would become sponsors of the trust, holding all the units, while the RIL subsidiary would become a co-sponsor, without holding units.

The trust currently owns 51% of Reliance Jio lnfratel, with the remainder held by Reliance Industries. On receiving the funds, the trust would buy out Reliance’s 49% stake, repay Rs 12,000 crore to Reliance Jio Infocomm and “certain existing financial liabilities of Reliance Jio Infratel,” besides investing for the tower firm’s growth, RIL had said.

Jio demerged the tower business into Jio Infratel in the quarter ended March 2020.