Jio Platforms has been the latest favourite of international investors in technology and private equities. Jio Platforms has raised Rs. 1,17,588.45 crore from top technology investors in less than 11 weeks. It includes Facebook, Silver Lake, General Atlantic, Vista Equity Partners, KKR & Co. Inc, Mubadala, ADIA, TPG, L-Catterton, PIF and Intel Capital. The agreement signed by Reliance Industries Ltd. indicates that there appears to be interest from international investors in the Indian market.
What is Jio Platforms?
Jio Platforms is a Reliance Industries technology subsidiary that came to light last month when Facebook revealed plans to invest $5.7 billion (approx. Rs. 43,575 crores) for a 9.9 percent stake in the venture. While Reliance Jio was the star of the Mukesh Ambani empire, behind the scenes Jio Platforms created a digital platform. Nonetheless, its roots can be traced back to 2010 when, during the broadband auction, Infotel Broadband Services Limited (ISBL), invested $2.7 billion (approx. Rs. 20,435 crores) to secure a pan-India license.
Reliance Industries took a 95 percent stake in ISBL shortly after the auction. As per Fortune reports, the timing of the deal led to a rumour that Mukesh Ambani himself was bankrolling the initial spectrum acquisition by ISBL. Although competition accused ISBL of violating the auction rules, a regulatory body later cleared it. The contract between RIL and ISBL was Mukesh Ambani ‘s entry into telecom space after breaking their family business with a non-compete agreement between him and his brother. In 2013, Mukesh Ambani renamed ISBL as Jio Platforms, which operates as a wholly-owned subsidiary of Reliance Jio Infocomm Limited.
Jio Platforms is described as a technology platform of the next generation, focused on delivering digital services across India. Jio, a data-based 4G LTE network introduced in India in 2016, has been its proof of concept product so far. It boasts nearly 400 million paying subscribers and, at one point, grew faster than Facebook. The success of Jio in India has raised many expectations but the biggest moment came when Mukesh Ambani spent $33 billion (approx. Rs. 2,49,830 crores) to create a national 4G broadband service network. That allowed Jio to offer its subscribers cheaper data services and free domestic calling.
The free data and voice calling provided to Jio’s 4G LTE network initially tempted Indian consumers. It also joined up with telecom providers and promised to push adoption rates to its own 4G phones under the LYF name. Jio’s rapid growth left established players with two options: to leave or merge the market. Although companies such as Airtel and Vodafone were trying to merge, Reliance Communications from Anil Ambani was pushed out of business altogether. Reliance Jio has the highest average per-user revenue in the industry and Reliance Industries is the biggest Fortune 500 company in terms of revenue in 2019. The fact that Mukesh Ambani is the richest Asian in the Forbes billionaire index does not come as a shock.
Jio Platforms: Investment Timeline
Facebook kickstarted the investment cycle in Jio Platforms last month with one of the largest equity investments. Other Private Equity investors who saw interest at Jio Platforms followed. After the recent investment, Jio Platforms has an equity value of Rs. 4.91 lakh crore and an enterprise value of Rs 5.16 lakh crore. In 11 weeks it has raised Rs. 1,17,588.45 crore from 11 major investors where Silver Lake invested two times. Below is the investment timeline:
- April 22, 2020: Facebook — Rs. 43,574 crore — 9.99 percent stake
- May 4, 2020: Silver Lake — Rs. 5,655.75 crore — 1.15 percent stake
- May 8, 2020: Vista — Rs. 11,367 crore — 2.32 percent stake
- May 17, 2020: General Atlantic — Rs. 6,598.38 crore — 1.34 percent equity stake
- May 22, 2020: KKR & Co. Inc. — Rs. 11,367 crore — 2.32 percent stake
- June 5, 2020: Mubadala Investment — Rs. 9,093.60 crore — 1.85 percent stake
- June 5, 2020: Silver Lake — Rs. 4,546.80 crore — 0.93 percent stake
- June 7, 2020: ADIA — Rs. 5,683.50 crore — 1.16 percent stake
- June 13, 2020: TPG — Rs. 4,546.80 crore — 0.93 percent stake
- June 13, 2020: L-Catterton — Rs. 1,894.50 crore — 0.39 percent stake
- June 18, 2020: PIF — Rs. 11,367 crore — 2.32 percent stake
- July 3, 2020: Intel Capital — Rs. 1,894.50 crore — 0.39 percent stake
Total Stake Sold in Jio Platforms — 25.09 percent
These investment deals helped RIL become net debt-free 8 months ahead of its March 2021 target.
In less than two months, RIL raised over Rs 1,68,818 crore via Jio Platforms and Rights Issue. Rs 1,15,693.95 crore raised from investors across the world in Jio Platforms and Rs. 53,124.20 crore through the rights issue. In addition to the petro-retail JV stake sale to BP, the total fundraises now exceeds Rs. 1,75,000 crore.
RIL net-debt was Rs. 1,61.035 as of March 31, 2020, and will all these investments it is now debt-free.
Jio Platforms Ecosystem
|MyJio||Telecom and Utility|
|JioSaavn||Music and audio streaming|
|JioCinema||Movies and video streaming|
|JioTV||Live and Catch-up television|
|JioVR||Immersive 360° VR content|
|JioBrowser||Data-light web browsing|
|JioSecurity||Mobile and data security|
|JioHealthHub||Heath and e-diagnostics|
|JioChat||Messaging, voice/video calling|
|JioCloud||Cloud Storage and backup|
|JioMart*||Ecommerce and Kirana|
|JioMeet||Multi-party video conferencing|
|JioGate||Apartment security/gate management|
|JioMotive||Live vehicle tracking|
|JioSmartSecurity||Cloud-based smart camera/doorbell|
|*App yet to be launched|
Aim of Jio Platforms
Jio Platforms claims to be creating a digital society fuelled by the network technology from Reliance Jio. This seeks to digitize customers’ utilities, enabling them to shop digitally and to pay electronically. Although there are already such services available in the country, Jio Platforms wants to put Kirana stores into the digital world. This is seen as a game-changer and a potential business boost for WhatsApp.
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