In the last six weeks, investments totaling nearly $12.9 billion have flowed into Jio Platforms, the parent company of Indian operator Reliance Jio Infocomm. Never before has there been such a frenzy of funding around an Indian service provider.
The investors range from social media giant Facebook to private equity firms like Silver Lake, KKR, Vista and Mubadala. Media reports now suggest that Google and Microsoft are looking to invest in Jio Platforms. (See India's Jio welcomes Vista as latest investor, Facebook places huge bet on India with $5.7B Jio stake, After Facebook, Silver Lake invests $747M in India's Jio and Say hello to India's first digital service provider.)
Facebook is the biggest investor, forking out $5.7 billion for a stake of nearly 10%, via a new entity called Jaadhu Holdings. In the meantime, Reliance Industries, the parent company of Jio Platforms, recently announced a successful $7 billion rights issue earlier this month. Investment activity around Jio Platforms appears to have boosted investor confidence in Reliance Industries, which had a massive debt of INR1.53 trillion ($20.3 billion) back in December.
Table 1: Investments in Jio
|Name of the investor||Amount invested in Jio ($ billions)||Stake (%)|
|Abu Dhabi Investment Authority (ADIA)||0.75||1.16|
|Source: News reports, companies.|
Interest in Jio has also inspired other Internet firms to consider making investments in telecom service providers. Google is reportedly looking at Vodafone Idea, while Amazon is said to be examining Bharti Airtel. (See Amazon wants to buy stake worth $2B in India's Airtel – reports and Google explores 5% stake in Vodafone Idea – report.)
Deals should help Jio to achieve its goal of becoming debt-free by March 2021 and to develop new products. The company is already believed to be working with Facebook on a range of applications, including a "super app" that will combine several functions in one platform. Jio might also use some of the investments to develop its own 5G technology and ecosystem in the country. (See India's RJio wants to develop its own 5G.)
As India's only pure-play 4G platform, Jio has been able to acquire more than 300 million customers in a little over three years. Its success owes much to its strategy of offering free data services for the first six months of operation.
With half the population lacking broadband access and a growing middle class, India always seemed a potential opportunity for investors. But its appeal has increased in the last few months as Indians have increasingly turned to online platforms to work and study from home, book medical appointments, shop and bank. The outbreak of COVID-19 has clearly been a catalyst for digitalization. In turn, that may have hastened investment activity.
Anti-China sentiment may have helped, too. Amid the COVID-19 pandemic, criticism of China, where the disease first originated, has grown. As investors look for opportunities in other parts of the world, some eyes may have settled on one Indian firm.
— Gagandeep Kaur, contributing editor, special to Light Reading