The social media giant, Facebook on Wednesday, April 22 announced an investment of USD 5.7 billion (Rs 43,574 crore) to buy a 10 per cent stake in the firm that houses billionaire Mukesh Ambani's telecom arm Jio as Facebook looks to expand presence in its largest market in terms of subscriber base.
This is the largest investment for a minority stake by a technology company anywhere in the world and the largest FDI in the Indian tech sector. The statement issued by Reliance read, "Today we are announcing a USD 5.7 billion, or Rs 43,574 crore, investment in Jio Platforms Ltd, part of Reliance Industries Ltd, making Facebook its largest minority shareholder."
RIL chairman and managing director and Asia's richest man Mukesh Ambani said: "the synergy between Jio and Facebook will help realise Prime Minister Narendra Modi's Digital India' Mission with its two ambitious goals -- 'Ease of Living' and 'Ease of Doing Business' -- for every single category of Indian people without exception".
Facebook's investments Jio Platforms
Facebook's investment will make it the largest minority shareholder in Jio Platforms Ltd, Jio said in a statement on Wednesday, putting the enterprise value of the business at around $66 billion. Jio Platforms holds a host of Reliance's digital assets including Jio Infocomm.
WhatsApp is trying to secure approval to roll out its digital payment service in India, which will see it compete in a crowded market with the likes of Google Pay and Paytm. The approval to expand beyond the beta launch hasn't come through yet, a Facebook spokesman said.
The messaging service has 400 million users in India, its biggest market, reaching nearly 80 per cent of smartphone users in the country. The deal will also help the social media giant leverage WhatsApp to partner with Reliance's e-commerce marketplace JioMart, that connects small businesses to customers.
"(India) is in the middle of a major digital transformation and organizations like Jio have played a big part in getting hundreds of millions of Indian people and small businesses online," Facebook founder CEO Mark Zuckerberg said in a post.
For Reliance, whose debt pile swelled to more than $40 billion as of September, the partnership will bring in much-needed funds to make good on its promise to cut net debt to zero by March 2021.
Reliance to sell its oil shares
Reliance Industries, controlled by billionaire Mukesh Ambani, is also set to sell a fifth of its oil and chemical refining business to Saudi Aramco for roughly $15 billion, and a stake in its telecom tower assets to Canadian private equity firm Brookfield Asset Management for over $3 billion.
While Jio has become the country's largest wireless operator within about three years of its launch, Mumbai-headquartered Reliance has also rapidly expanded its retail business, which now has over 10,000 stores selling groceries, consumer electronics and apparel.
Revenue at these two businesses together jumped more than 25 per cent in the December quarter.
Last month, Financial Times reported that Facebook was in talks for a 10 per cent stake in Jio but the talks were halted due to global travel bans amid the coronavirus outbreak. Jio said Morgan Stanley was the financial adviser on the deal. AZB & Partners, and Davis Polk & Wardwell were counsels.
India is in the midst of one of the most dynamic social and economic transformations the world has ever seen, driven by the rapid adoption of digital technologies. In just the past five years, more than 560 million people in India have gained access to the internet.
Over the years, Facebook has invested in India to connect people and help businesses launch and grow. WhatsApp is so ingrained in Indian life that it has become a commonly used verb across many Indian languages and dialects.
(inputs from wires)