05 May 2020 | Melanie Mingas
US-based tech investment firm Silver Lake has paid US$746.8 million dollars for a 1.5% stake in Jio Platforms, part of Reliance Industry’s telecoms arm Reliance Jio.
The deal is the second such investment for the company in less than two weeks, following Facebook’s 9.99% stake, announced on 22 April.
It takes external investor holding to 11.14% and marks a new direction for the company as it looks to reduce net debt to zero by March 2021.
A statement from Jio Platforms said the wholly-owned subsidiary of Reliance Industries Limited, is “building a Digital Society for India by bringing together Jio’s leading digital apps, digital ecosystems and India’s number one high speed connectivity platform under one umbrella”, with a focus on small merchants, micro-businesses and farmers.
It further stated that Reliance Jio Infocomm Limited, which provides connectivity platform to over 388 million subscribers, will continue to be a wholly-owned subsidiary of Jio Platforms.
The statement continued: “In the wake of the severe economic disruptions caused by the COVID-19 pandemic, globally and especially within India, this partnership with one of the most renowned tech-investors globally, Silver Lake, has special significance. Comprehensive digitisation will be a vital component of the revitalisation of the Indian economy. It is our strong conviction that no one should be deprived of the tremendous new opportunities, including those for new employment and new businesses, embedded in India’s 360-degree digital transformation.”
Silver Lake’s previous investments have included Airbnb, Alibaba, Ant Financial, Alphabet’s Verily and Waymo units, Dell Technologies, Twitter and others and the firm has approximately $40 billion in combined assets under management.
Egon Durban, Silver Lake co-CEO and managing partner, said: “Jio Platforms is one of the world’s most remarkable companies, led by an incredibly strong and entrepreneurial management team who are driving and actualizing a courageous vision. They have brought extraordinary engineering capabilities to bear on bringing the power of low-cost digital services to a mass consumer and small businesses population. The market potential they are addressing is enormous, and we are honored and pleased to have been invited to partner with Mukesh Ambani and the team at Reliance and Jio to help further the Jio mission.”
Jio Platforms moved quickly on its earlier deal with Facebook, integrating WhatsApp and JioMart services to capture the online grocery market, within a week of announcing their investment deal. It now aims to take on Amazon and Walmart’s Flipkart by offering a more convenient ordering service paired, free delivery and no minimum order.
The new funds are likely to support Jio’s future work in broadband connectivity, smart devices, cloud and edge computing, big data analytics, AI, IoT, augmented and mixed reality and blockchain.
Morgan Stanley acted as financial advisor to Reliance Industries and AZB & Partners and Davis Polk & Wardwell acted as legal counsels and the transaction is subject to regulatory and other customary approvals.
Mukesh Ambani, chairman and managing director, Reliance Industries Ltd, said: “I am delighted to welcome Silver Lake as a valued partner in continuing to grow and transform the Indian digital ecosystem for the benefit of all Indians. Silver Lake has an outstanding record of being a valuable partner for leading technology companies globally. Silver Lake is one of the most respected voices in technology and finance. We are excited to leverage insights from their global technology relationships for the Indian Digital Society’s transformation.”