Saudi Arabia’s sovereign asset manager, Public Investment Fund or PIF, on Thursday, announced an investment of ₹11,367 crore in Jio Platforms Ltd, the digital assets unit of Reliance Industries Ltd.
With this investment, Jio Platforms has raised about ₹1.16 trillion from 11 investors in just eight weeks, signifying the rapid digitization opportunity in India and emergence of latest technologies such as AI, Blockchain, AR/VR, Big data for individuals and businesses.
Starting with Facebook’s ₹43,574 crore investment announced on 22 April, Jio Platforms has secured investment commitment from a number of large global private equity players including Silver Lake, Vista Equity Partners, General Atlantic, KKR, Mubadala, ADIA, TPG, L Catterton and now PIF.
The PIF deal takes the total acquisition commitment by foreign investors in Jio Platforms at 24.71%.
The deals are aimed at helping RIL become net debt-free by March 2021. RIL, as on 31 December, had net debt of ₹1.53 trillion.
However, the actual inflow of investment money from the deals announced so far is likely to hinge on the Indian regulators’ approval on the partnership proposed between Facebook and Jio Platforms, which is being examined by antitrust authority, Competition Commission of India.
Facebook, with over 300 million customers in India and Jio Platforms with about 388 million, plan to tap their combined user base to extend digital payments and e-commerce services in the country. Facebook’s messaging platform WhatsApp, which has about 450 million users, also plans to partner Jio Platforms to enable customers in India order household items from neighbourhood groceries at their doorsteps using the JioMart platform.
The PIF deal values Jio Platforms at ₹4.91 trillion, like the previous deals. It will give PIF a 2.32% stake in Jio Platforms.
“We at Reliance have enjoyed a long and fruitful relationship with the Kingdom of Saudi Arabia for many decades,” said RIL chairman Mukesh Ambani.
However, a deal with Saudi Aramco for a minority stake sale in RIL’s oil and gas business has not gone through yet. Also, a deal proposing a sale of towers assets of Reliance Jio Infocomm Ltd to private equity fund Brookfield is still to receive regulatory approvals.
“From oil economy, this relationship is now moving to strengthen India’s New Oil (Data-driven) economy, as is evident from PIF’s investment into Jio Platforms,” said Ambani.
Yasir Al-Rumayyan, governor of PIF, said the fund believes that the potential of the Indian digital economy is exciting and that Jio Platforms will provide PIF an opportunity to gain access to that growth. “This investment will also enable us to generate significant long-term commercial returns…”
Of the ₹43,574 crore potentially coming from Facebook, Jio plans to use ₹28,000 crore to redeem optionally convertible preference shares (OCPS) of its parent RIL and retain ₹15,000 crore in its books, Jio’s top management had said in a conference call on 22 April.
Jio Platforms combines all of RIL’s digital and telecom initiatives, including Jio digital services, mobile and broadband, apps, tech capabilities such as artificial intelligence, Big Data, and Internet of Things, and other investments such as in Den Networks, Hathway Cable, and Datacom Ltd.
Jio Platforms has made significant investments across its digital ecosystem spanning across broadband connectivity, smart devices, cloud and edge computing, big data analytics, artificial intelligence, Internet of Things, augmented and mixed reality and blockchain.
