India 2020: Silver Lake Partners, the American private equity giant, has bought one percent of Jio Platforms for $750 million (Rs. 5,655.75 crore) in a deal that values the tech and digital arm of Reliance Industries Ltd (RIL) at $65 billion.
The deal comes less than two weeks after Facebook spent $5.7 billion to buy a 9.99 percent stake in Jio. The Facebook-Jio deal was the social media network’s biggest since its $22 billion buyout of WhatsApp in 2014.
This is the first sizable investment by SLP in India and reaffirms Jio’s technological capabilities and the potential of the business model, even in this Covid-19 world and beyond. This is at a 12.5 percent premium over the FB deal announced on April 22 this year.
Commenting on the transaction, RIL Chairman Mukesh Ambani said, “I am delighted to welcome Silver Lake as a valued partner in continuing to grow and transform the Indian digital ecosystem for the benefit of all Indians. Silver Lake has an outstanding record of being a valuable partner for leading technology companies globally. Silver Lake is one of the most respected voices in technology and finance. We are excited to leverage insights from their global technology relationships for the Indian Digital Society’s transformation.”
Silver Lake shot into prominence after acquiring PC maker Dell Inc along with Michael Dell in 2013. It is a global leader in technology investing, with over $43 billion in combined assets under management and committed capital and a team of approximately 100 investment and operating professionals located around the world in Silicon Valley, New York, Hong Kong and London.
On April 30, Reliance had said, “In addition to the Facebook investment, the Board was informed that RIL has received strong interest from other strategic and financial investors and is in good shape to announce a similar sized investment in the coming months.”
On April 22, Facebook bought 9.9 percent stake in Jio Platforms for Rs 43,574 crore. That deal valued Jio at Rs 4.62 lakh crore ($65.95 billion).
Since its launch three years ago, Jio, led by billionaire Mukesh Ambani, has grown at a sprinter’s pace to become India’s largest telecom company. It has accumulated some 340 million customers through a barrage of innovations, including offering cut-throat mobile internet prices and a diverse suite of products and including chat services, movies, games and music.
The deal will help reduce RIL’s debt burden, which bulged due to the breakneck expansion of Jio and other businesses. Ambani invested around $40 billion to launch Jio in 2016. RIL is also the largest retail player in India thanks to a series of aggressive expansionary moves into consumer-facing businesses such as e-commerce and grocery.
On April 30, Reliance Industries said it will achieve zero net debt status ahead of schedule, as it announced its quarterly and annual results.
In addition to the investment by Facebook, the company said, it has received strong interest from other strategic and financial investors and is in good shape to announce a similar-sized investment in the coming months.