Reliance Strategic Business Ventures Limited (RSBVL) on Thursday announced it has agreed to create a joint venture (JV) with US-listed Sanmina Corp (SANM.O) for making electronic products.
RSBVL will hold 50.1 percent equity stake in the joint venture entity with Sanmina owning the remaining 49.9 percent, RIL said in a regulatory filing on March 3. “RSBVL will achieve this ownership primarily through an investment of upto Rs 1,670 crore in new shares in Sanmina’s existing Indian entity, while Sanmina will contribute its existing contract manufacturing business. As a result of the investment, the joint venture will be capitalized with over $200 million of cash to fund growth.”
The JV aims to make hardware for 5G communications, cloud infrastructure, healthcare systems, and defense and aerospace, Reliance said in a regulatory filing.
Reliance will hold a 50.1 percent stake in the JV after the investment in Sanmina's existing Indian entity through a Reliance unit. Sanmina will contribute its existing contract manufacturing business to the JV, according to Moneycontrol.
All manufacturing will initially take place at Sanmina's campus in the south Indian city of Chennai, with an option for expansion in other manufacturing sites within the country, Reuters said.
The day-to-day business will continue to be managed by Sanmina's existing management team in Chennai, which will be seamless from an employee and customer perspective.
"RSBVL will achieve this ownership primarily through an investment of up to Rs 1,670 crore in new shares in Sanmina's existing Indian entity, while Sanmina will contribute to its existing contract manufacturing business," the statement said.
As a result of the investment, the joint venture will be capitalized with over $200 million of cash to fund growth. Akash Ambani, the Director of Reliance Jio, said, "We are delighted to work with Sanmina to access the significant market opportunity for high-tech manufacturing in India. For both growth and security, it is essential for India to be more self-reliant in electronics manufacturing in Telecom, IT, Data Centers, Cloud, 5G, New Energy and other industries as we chart our path in the new digital economy. Through this partnership we plan to boost innovation and talent in India, meeting both Indian and global demand."
"We are excited to partner with Reliance to build the premier integrated manufacturing solutions company in India," stated Jure Sola, Chairman and Chief Executive Officer of Sanmina. "This joint venture will service both domestic and export markets and represents a major milestone in the Indian government's 'Make in India' initiative," Sola added.
The completion of the transaction is subject to customary closing conditions, including regulatory approvals. The transaction is expected to close no later than September 2022
On the NSE, Reliance shares were trading 0.16 percent or Rs 3.95 up at Rs 2,402.50 apiece at 9.50 AM.
