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Deal
Facebook Inc announced a $ 5.7 billion investment in the telecommunications unit of Reliance Industries Ltd on Wednesday, making it the largest minority shareholder in Jio Platforms Limited.
FILE PHOTO: This illustration, taken on April 12, 2020, places a 3D printed Facebook logo between small figures of toy people in front of a keyboard. REUTERS / Dado Ruvic / Illustration
BENGALURU: Facebook will buy a 10 percent stake in Reliance Industries’ digital business in India for $ 5.7 billion as the social media firm seeks to take advantage of its very popular WhatsApp chat service to offer paid services digital.
The deal will help the Indian conglomerate reduce the debt that has accumulated in its costly drive to secure first place for its Jio Infocomm telecoms business.
Facebook’s investment will make it the largest minority shareholder in Jio Platforms Ltd, Jio https://bit.ly/34Wzy1a said in a statement on Wednesday, putting the business value of the business at around $ 66 billion. Jio Platforms owns a large number of Reliance digital assets, including Jio Infocomm.
WhatsApp is trying to get approval to implement its digital payment service in India, which will see it compete in a crowded market with Google Pay and Paytm. Approval to expand beyond the beta launch has yet to come, a Facebook spokesperson said.
The messaging service has 400 million users in India, its largest market, reaching almost 80 percent of smartphone users in the country. The deal will also help the social media giant take advantage of WhatsApp https://about.fb.com/news/2020/04/facebook-invests-in-jio to partner with Reliance’s e-commerce market, JioMart, which connects small businesses with customers. .
“(India) is in the midst of a huge digital transformation and organizations like Jio have played a major role in connecting hundreds of millions of Indians and small businesses online,” said Facebook CEO Mark Zuckerberg, https: / /www.facebook. com / zuck in a post.
For Reliance, whose debt accumulation increased to more than $ 40 billion from September, the association will provide the necessary funds to fulfill its promise to reduce net debt to zero by March 2021.
Reliance Industries, controlled by billionaire Mukesh Ambani, will also sell a fifth of its oil and chemical refining business to Saudi Aramco for approximately $ 15 billion, and a stake in its telecom tower assets to the Canadian firm. Brookfield Asset Management private equity in excess of $ 3 billion.
While Jio has become the country’s largest wireless operator within three years of its launch, Mumbai-based Reliance has also rapidly expanded its retail business, which now has more than 10,000 grocery stores, consumer electronics and clothing.
Revenue from these two businesses together increased more than 25 percent in the December quarter.
Last month, the Financial Times reported that Facebook was in talks for a 10 percent stake in Jio, but the talks were suspended due to global travel bans amid the coronavirus outbreak.
Jio said Morgan Stanley was the financial advisor to the deal. AZB & Partners and Davis Polk & Wardwell were advisers.
(Reporting by Bhargav Acharya in Bangalore; Additional reporting by Subrat Patnaik in Bangalore and Katie Paul in San Francisco; Writing by Sayantani Ghosh; Ramakrishnan M & Shri Navaratnam Edition)
