Jio Platforms has become the new darling of international tech and private equity investors. In less than four weeks, Jio Platforms has raised Rs 67,194.75 crore from leading technology investors. This includes Facebook, Silver Lake, Vista Equity Partners and General Atlantic. The deal signed by Reliance Industries Ltd shows that foreign investors are continuing to show interest in the Indian market. “These are the kind of investors that will bring other PE players,” said Samir Arora of Helios Capital on CNBC-TV18. He also added that Reliance is one of the bigger holdings in their portfolio. Also Read - Jio platforms now gets Rs 6,598 crore investment from General Atlantic
What is Jio Platforms?
Jio Platforms is a technology subsidiary of Reliance Industries that came to light when Facebook announced plans to invest $5.7 billion for a 9.9 percent stake in the company last month. While Reliance Jio has been the star of Mukesh Ambani’s conglomerate, Jio Platforms has been building a digital platform behind the scenes. However, its origin can be traced back to 2010 when Infotel Broadband Services Limited (ISBL), spent $2.7 billion to win pan-India license during broadband spectrum auction. Also Read - Jio Platforms gets third investment in three weeks; PE firm Vista invests Rs 11,367 crore
Shortly after the auction, Reliance Industries took a 95 percent stake in ISBL. As Fortune notes, the timing of the deal led to speculation that ISBL’s initial spectrum purchase was bankrolled by Mukesh Ambani himself. While competition accused ISBL of breaking auction rules, it was later cleared by a regulatory body. The deal between RIL and ISBL was Mukesh Ambani’s entry into the telecom space after he and his brother split their family business with a non-compete clause. In 2013, Mukesh Ambani renamed ISBL as Jio Platforms, which operates Reliance Jio Infocomm Limited as a wholly owned subsidiary. Also Read - Silver Lake set to invest Rs 5,655 crore in Reliance Jio platforms
Jio Platforms is described as a next-generation technology platform focused on delivering digital services across India. Its proof of concept product so far has been Jio, a data-centric 4G LTE network that was launched in India in 2016. It boasts of 388 paid subscribers and was growing faster than Facebook at one point. Jio’s success in India has raised a lot of eyebrows but the biggest moment came when Mukesh Ambani invested $33 billion to construct a nationwide 4G broadband service network. This allowed Jio to offer cheaper data services and free domestic calling to its subscribers.
The free data and voice calling offered initially lured Indian consumers to Jio’s 4G LTE network. It also tied up with mobile companies and offered its own 4G phones under the LYF brand to drive adoption rates. Jio’s accelerated growth left incumbent players with two options: exit the business or consolidate. While players like Airtel and Vodafone moved to consolidate, Anil Ambani’s Reliance Communications was squeezed out of business altogether. Reliance Jio has the largest average revenue per user in the industry and Reliance Industries remains the biggest company in Fortune 500 in terms of revenue in 2019. It shouldn’t come as a surprise that Mukesh Ambani is the richest Asian in the Forbes billionaire index.
Jio Platforms: Timeline of Investment
The investment cycle in Jio Platforms was kickstarted by Facebook with one of its biggest equity investments in April. It was followed by other PE investors who saw value in Jio Platforms. Jio Platforms has an equity value of Rs 4.91 lakh crore and an enterprise value of Rs 5.16 lakh crore after the recent investment from Silver Lake, AIDA, TPG and L Catterton. It has raised Rs 1,04,326.65 crore from the deals so far and has sold a total of 22.38 percent stake in the company. Here is a timeline:
April 22, 2020: Facebook announces investment of Rs 43,574 crore for a 9.99 percent stake
May 4, 2020: Silver Lake announces equity investment of Rs 5,655.75 crore
May 8, 2020: Vista announces equity investment of Rs 11,367 crore for a 2.32 percent stake
May 17, 2020: General Atlantic invests Rs 6,598.38 crore for a 1.34 percent equity stake
May 22, 2020: KKR announces Rs 11,367 crore investment for a 2.32 percent stake
June 5, 2020: Mubadala announces Rs 9,09360 crore investment for a 1.85 percent equity stake
June 5, 2020: Silver Lake announces additional equity investment of Rs 4,546.80 crore
June 7, 2020: Abu Dhabi Investment Authority invests Rs 5,683.50 crore for a 1.16% stake
June 13, 2020: TPG invests Rs 4,546.80 crore for a 0.93% stake
June 13, 2020: L Catterton joins Jio Platforms’ investors list with a Rs 1,894.50 crore investment for a 0.39 percent stake
What does Jio Platforms aim to do?
Jio Platforms claims to build a digital society powered by Reliance Jio‘s network technology. It aims to digitize services for consumers, allowing them to shop online and pay online. While such services are already available in the country, Jio Platforms wants to bring kirana stores to the digital world. This is seen as a game changer and a potential business opportunity for WhatsApp, the Facebook-owned messaging platform with nearly 400 million users in the country.