1. Explained


Professor of Financial Economics and Part-time Value Investor, Transfin.
Jan 1, 1970 12:00 AM 4 min read

Moving on to the top Business news of the day. 


Aramco finalises a deal with Reliance Oil, but will it be enough for the Saudi oil giant? What Aramco wants – a successful, mega IPO.
All About Oil: Saudi Aramco will buy a 20% stake in Reliance Industries’ refining and petrochemicals business for $15bn. But will it put a lid on the world’s largest oil and gas company’s appetite for the vast Indian market? Besides its agreement to provide RIL’s twin refineries with 500,000 barrels of crude oil per day, its commitment to a $44bn refinery and petrochemicals project in Maharashtra will shed light on this as time goes by.
Aramco Gears Up: Aramco’s deal with RIL comes at the heels of its first-ever earnings call with financial analysts. These twin moves could be aimed at one goal – a goal the company has had for years – to list its shares on a stock market. Such an IPO could raise as much as $100bn, dwarfing the biggest IPO to hit Wall Street till date – that of Alibaba – which was a fourth of that number. It would also help the Saudi Arabian government in its efforts to diversity the petrostate’s economy.
Will JioFiber disrupt the media industry? Multiplex owners are unfazed over JioFiber’s supposed first-day-first-show premium feature.

Broadband Ambani: Reliance Jio’s upcoming broadband service JioFiber comes with monthly plans between IN700 and INR10,000 and offers premium customers the opportunity to watch movies in their living rooms the same day that they’re released in theatres.
But will it be able to disrupt the media industry the way Jio disrupted Indian telecom? Experts are unconvinced. For starters, while DTH players may be hit, JioFiber’s pricing is low but not Jio-level low that would force most competitors to shut shop overnight.
And a first-day-first-show movie release scheme, even if executed universally despite the eight-week exclusive window theatre owners demand from distributors, won’t succeed in dampening the movie-going experience, multiplex players say. PVR, for example, is confident there won’t be any disruption since “theatrical and at-home are two completely different experiences and each has their own places”.

Meanwhile, This: The announcement of JioFiber and Aramco’s stake purchasedrove RIL’s stock up c. 12% in intra-day trade on the NSE (the stock’s biggest single-day gain in 10 years).

Viacom-CBS merger reportedly imminent. A merger to compete with larger rivals or a merger meant to be a means to an end?
Together We Stand: Some companies are apparently too big to fail; some others are apparently too small to succeed. Shari Redstone, who oversees both CBS and Viacom, has been working towards merging the big cable programmer and broadcast TV network for years. Today, it seems, that Redstone's dream is closer than ever to fruition. (Although, merger attempts have come and gone, and this one’s dragging on too, dragging down the companies’ shares in the meantime.)
Divided We Fall: These two companies are responsible for many popular shows and channels, including The Daily Show, Comedy Central, NCIS, MTV, Showtime and the Paramount movie studio. The rationale is to merge the two players to make them more competitive against larger players like Disney and WarnerMedia, as well as streaming giants like Netflix.
Reality Check: Despite all the commentary surrounding this merger, a “turning point” in the media landscape, the fact remains that the merged entity will still be too small to compete with its rivals. What might be on the table, then? More mergers and acquisitions, of course!

Anil Agarwal’s Volcan Investments withdraws Expression of Interest for Jet’s revival bid.
Deserter: Anil Agarwal's Volcan Investments has withdrawn its Expression of Interest (EoI) for debt-laden Jet Airways.
In a statement on Monday, Agarwal said that the EoI submitted by his family trust was only exploratory in nature. He added that upon further evaluation and considering other priorities, the trust has decided to not pursue it. 
The withdrawal came shortly after Etihad, 24% stakeholder in Jet, said that it decided against submitting an EoI due to unresolved issues concerning the airline’s liabilities.
More on this here.

Meesho raises $125mn in funding round led by Naspers. Why are startups increasingly opting for venture debt funding?
Meesho Happy: Bengaluru- and California-based online marketplace for resellers, Meesho, has reportedly raised $125mn in a funding round led by Naspers. Facebook, SAIF Partners, Sequoia Capital India were among those who participated in the funding round. Meesho said it would use the capital raised to expand beyond India’s metros and enhance and upgrade its platform.
Capital Chronicles: As the ecosystem in India expands in size and with the economy combating a liquidity crisis, more and more startups are embracing venture debt funding. An analysis of the accelerating trend here.
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