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MUMBAI / BENGALURU: In what is touted as the largest strategic investment for a minority stake by a technology company anywhere in the world, social media giant Facebook agreed to invest $ 5.7 billion or Rs 43,574 million rupees for a 9.99% stake in Mumbai Jio Platforms, a unit of Reliance Industries (RIL). Between Jio’s latest subscriber base of 388 million and more than 700 million Indian users on all three Facebook platforms: Facebook, WhatsApp and Instagram, their combined reach will be over a billion, albeit with considerable overlap.
The transaction gives Mark Zuckerberg, Facebook CEO and the seventh richest man in the world according to Forbes, an opportunity to deepen FB’s presence in India, which is its largest market in terms of users and where Mukesh Ambani, the man India’s richest, it has revolutionized the telecommunications industry. with cheap data plans
“At the core of our partnership is the commitment that Mark Zuckerberg and I share for India’s comprehensive digital transformation,” Ambani, RIL President, said in a video message. RIL believes that comprehensive digitization will be an absolute necessity to revitalize the Indian economy in the post-pandemic era.
Zuckerberg said there is more to the financial investment he is making in Jio Platforms. “We are committed to working together on some major projects that will open up business opportunities across India,” he said on his Facebook page.
The transaction, which is among the largest FDI transactions in India’s tech sector, will help RIL reduce its $ 43 billion debt as Jio Platforms will return approximately $ 4.1 billion to parent RIL. Facebook’s investment values Jio platforms, which run apps like JioSaavn and JioCinema, and maintain investments in Reliance Jio Infocomm, operator of the world’s third largest mobile services network, at $ 57 billion (and $ 66 billion based On the assumption of an exchange rate of Rs de Reliance) 70 / $).
If Jio Platforms were included today, it would be the fifth highest rated company in India after RIL, TCS, Hindustan Unilever and HDFC Bank. It is valued more than India’s second and third largest technology company, Infosys and Wipro, combined. Jio Platforms will also be 70% more valuable than its closest rival Bharti Airtel, which had a closing market cap of Rs 2.73 lakh crore on Wednesday.
In October 2019, RIL consolidated the digital platform business under a separate subsidiary to reflect the structure of global companies such as Alphabet-Google, Tencent and Alibaba that are largely debt-free, making it easier to attract investors to the new entity. .
The RIL-FB transaction has been in process since last year, with the first meetings between the best teams, including Ambani and Zuckerbeg, that revolve around understanding the potential areas of business collaboration. The talks progressed with the initial goal of closing the deal on March 31. But the Covid-19 outbreak delayed the final round of due diligence.
Facebook will get a dash seat and a “watcher seat” on Jio Platforms. The deal is binding, according to RIL, but will need approval from the Indian Antitrust Competition Commission. The announcement propelled RIL shares to close at 1,363.6 rupees, up 10.2% on the NSE.
The deal will also see a link between RIL’s retail unit and Facebook’s WhatsApp to leverage each other’s platforms to allow consumers to order items at their local kirana stores. This would allow Facebook to monetize its large user base, while also serving as a platform to drive adoption of its payments business under WhatsApp, which will compete with Google Pay, Alibaba, and Paytm backed by Softbank and Walmart-owned Phonepe.
“India has more than 60 million small businesses and millions of people trust them for their jobs. With communities across the globe locked in, many of these entrepreneurs need digital tools they can trust to find and communicate with customers and grow their businesses, ”said Zuckerberg.
According to industry watchers, Ambani wants Jio to be known as a digital services platform like the US-based Google and China’s Alibaba, and not just as a telecom player. Digital services contributed 25% to RIL’s operating profit during the nine months of fiscal year 2020.
Morgan Stanley and AZB Partners advised Jio Platforms on the deal, while Bank of America-Merrill Lynch assisted Facebook.
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The transaction gives Mark Zuckerberg, Facebook CEO and the seventh richest man in the world according to Forbes, an opportunity to deepen FB’s presence in India, which is its largest market in terms of users and where Mukesh Ambani, the man India’s richest, it has revolutionized the telecommunications industry. with cheap data plans
“At the core of our partnership is the commitment that Mark Zuckerberg and I share for India’s comprehensive digital transformation,” Ambani, RIL President, said in a video message. RIL believes that comprehensive digitization will be an absolute necessity to revitalize the Indian economy in the post-pandemic era.
Zuckerberg said there is more to the financial investment he is making in Jio Platforms. “We are committed to working together on some major projects that will open up business opportunities across India,” he said on his Facebook page.
The transaction, which is among the largest FDI transactions in India’s tech sector, will help RIL reduce its $ 43 billion debt as Jio Platforms will return approximately $ 4.1 billion to parent RIL. Facebook’s investment values Jio platforms, which run apps like JioSaavn and JioCinema, and maintain investments in Reliance Jio Infocomm, operator of the world’s third largest mobile services network, at $ 57 billion (and $ 66 billion based On the assumption of an exchange rate of Rs de Reliance) 70 / $).
If Jio Platforms were included today, it would be the fifth highest rated company in India after RIL, TCS, Hindustan Unilever and HDFC Bank. It is valued more than India’s second and third largest technology company, Infosys and Wipro, combined. Jio Platforms will also be 70% more valuable than its closest rival Bharti Airtel, which had a closing market cap of Rs 2.73 lakh crore on Wednesday.
In October 2019, RIL consolidated the digital platform business under a separate subsidiary to reflect the structure of global companies such as Alphabet-Google, Tencent and Alibaba that are largely debt-free, making it easier to attract investors to the new entity. .
The RIL-FB transaction has been in process since last year, with the first meetings between the best teams, including Ambani and Zuckerbeg, that revolve around understanding the potential areas of business collaboration. The talks progressed with the initial goal of closing the deal on March 31. But the Covid-19 outbreak delayed the final round of due diligence.
Facebook will get a dash seat and a “watcher seat” on Jio Platforms. The deal is binding, according to RIL, but will need approval from the Indian Antitrust Competition Commission. The announcement propelled RIL shares to close at 1,363.6 rupees, up 10.2% on the NSE.
The deal will also see a link between RIL’s retail unit and Facebook’s WhatsApp to leverage each other’s platforms to allow consumers to order items at their local kirana stores. This would allow Facebook to monetize its large user base, while also serving as a platform to drive adoption of its payments business under WhatsApp, which will compete with Google Pay, Alibaba, and Paytm backed by Softbank and Walmart-owned Phonepe.
“India has more than 60 million small businesses and millions of people trust them for their jobs. With communities across the globe locked in, many of these entrepreneurs need digital tools they can trust to find and communicate with customers and grow their businesses, ”said Zuckerberg.
According to industry watchers, Ambani wants Jio to be known as a digital services platform like the US-based Google and China’s Alibaba, and not just as a telecom player. Digital services contributed 25% to RIL’s operating profit during the nine months of fiscal year 2020.
Morgan Stanley and AZB Partners advised Jio Platforms on the deal, while Bank of America-Merrill Lynch assisted Facebook.
