Friday, May 29, 2020

Reliance Jio Investments

It all started on April 22, when India was at the height of its Covid-19 driven lockdown. A press release from Reliance Industries, the parent company of Reliance Jio dropped into the inbox of most journalists in India covering tech and telecom industries. 

The release was for announcing social media giant Facebook picking up a 9.9% stake with Jio Platforms for a whopping investment of  $5.3 billion (Rs 43,574 crore). 

Even though there had been whispers in news circles that Facebook was looking to invest in Jio Platforms, nobody really saw the amount of money that Mark Zuckerberg's outfit was ready to put in. 

It was staggering, to say the least.

From then on, there has been a steady stream of big-ticket tech investors pouring in money into Jio Platforms. In all, Facebook, Silver Lake, Vista, General Atlantic and KKR have announced aggregate investments of  $ 10.35 billion (Rs 78,562) crore into Jio Platforms for combined stake of 17%.

But the list does not end here. Microsoft is apparently interested in Jio. Also, the Abu Dhabi-based sovereign fund manager Mubadala Investment Co. is  likely to put in $1 billion in  Jio. 

This begs the obvious question: Why is Jio Platforms so attractive to everyone even in these recession-filled times?

Jio's growth and valuation 

Jio Platforms, a wholly-owned digital assets subsidiary of Reliance Industries, is a technology platform focused on providing high-quality and affordable digital services across India, with more than 388 million subscribers. 

Helmed by Asia's richest person Mukesh Ambani, Jio Platforms has made significant investments across its digital ecosystem, powered by leading technologies spanning broadband connectivity, smart devices, cloud and edge computing, big data analytics, artificial intelligence, Internet of Things, augmented and mixed reality and blockchain. 

Jio’s stated vision is to enable a 'Digital India' for 1.3 billion people and businesses across the country, including small merchants, micro-businesses and farmers.

Jio Platforms journey began as early as 2010 in the form of a company named Infotel Broadband Services Limited (ISBL), which splurged $2.7 billion to secure the all-India licence in the contentious broadband spectrum auction. But even then market rumours had it that ISBL was funded by Mukesh. In any case, Reliance Industries quickly moved in and picked a 95% stake in it.

In 2013, ISBL formally changed its name to Jio Platforms, which operates Reliance Jio Infocomm Limited as a wholly-owned subsidiary.

Jio, a game changer

Once Mukesh stepped in, the Indian telecom industry ceased to be the same again. His company's aggressive ways has virtually revolutionized India's digital consumption. Jio phone and data services launched in 2106 --- simply referred to as Jio --- has turned the market upside down with its disruptive ways. It is said that in the last ten years, half a billion Indians came online for the first time, and this in a major part credited to Jio's arrival on the scene.

Jio offered free calls and data services at impossibly cheap rates, and this has more or less pushed the competition to the margins. Mukesh, of course, pumped in $33 billion to construct a nationwide 4G broadband service network.

Along with offering  its 4G LTE network at cut-throat prices, Jio also tied up with mobile handset companies like Lyf and offered a package of handset and call and data connection at rates that there were impossible to match by the competition. 

In less than four years, Jio has amassed a subscriber base of over 388 millions. This white-hot aggressio has made the competitors run for cover.  Mukesh's own brother Anil Ambani's Reliance Communications had to exit the market altogether.  Vodafone and Idea have merged in a bid to face the onslaught as a single entity. Bharti's Airtel, which had the early-mover advantage, is putting up valiant battle. 

But the competitors are bleeding, while Jio now looks to shift gears.

Jio's ambitious plans

Call and data services are just one slice of the big pie that is in front of Jio Platforms  now. 

It has, in its stable, a slew of digital apps and services including music streaming JioSaavn, on-demand live television service JioTV. Jio also has plans to bring new movies to people’s home on the same day of their theatrical release.

Jio has also forayed into the video gaming category, unveiled a video call assistant to automate customer support, signed a deal with Microsoft to subsidize Office 365 and Azure for small businesses in India. Then there is its payments app JioMoney.

 And of course, the newly-launched Jio Mart, which is expected to create huge upheavals in the the Indian e-commerce arena

Now, Jio Platforms' battle-lines are drawn against Amazon India, Walmart's Flipkart, the Alibaba-backed BigBasket and Tencent-funded Udaan. 

As Mukesh noted in one of his speeches, "we have created an eco-system comprising network, devices, applications and content, platforms, service experience and affordable tariffs for everyone to live the Jio Digital Life."

All eyes on Jio Mart

India’s e-grocery market size is pegged at Rs 6,201 crore ($875 million), and is expected to grow exponentially to hit Rs 1.03 lakh crore ($14.6 billion) by 2023. All the companies in the fray know that they are only scratching the surface, and hence are unveiling ambitious plans to get a strong foothold.

But the disruption that Reliance Jio pulled off in the telecom sector, may not be all that easy in this ultra-competitive e-grocery market in India.

But Jio Mart will soon takes it fight to a new playground: WhatsApp.

WhatsApp is the crucial link for Jio Mart. It is likely to power the (business-to-consumer) payments offering, with a logistics network or the kirana store ensuring delivery.

And this is where Jio Platforms' tie-up with Facebook, which owns WhatsApp, is expected to play a pivotal role. Right off the bat, JioMart has the ready user base of India’s 400 million WhatsApp users. Jio Mart will also dip into the services of Facebook Messenger and Facebook app itself to integrate shopping feature and reach a broader user base. 

But essentially, Jio will leverage WhatsApp for Business to its retailers, with an end-to-end service, unlike now, where they have to go to other third-party companies.

Facebook CEO Mark Zuckerberg actually hinted at what the deal with Jio Platforms was aimed at. “India is a special place for us. We are also committing to work together on some critical projects that we think are going to open up a lot of opportunities for commerce in India. Facebook and WhatsApp have been trying to court small and medium businesses (SMBs) on their respective platforms over the last two years.


Headed for overseas listing?

All these developments unspooling at breakneck-speed is a precursor to Jio Platforms going public, especially with a view to getting listed on a foreign plaform, most likely to be Nasdaq.

Jio Platforms is said to be in talks with a couple of banks to take this forward. As per a Bloomberg report, the offering could take place in next 12-24 months. The belief is that Reliance Industries would sell would sell close to 25% of its stake in Jio Platforms before going for public listing.

Reports suggest Morgan Stanley may be appointed as the lead banker to manage company’s abroad listing.

Here's the timeline of investments into Jio Platforms so far:


Facebook, 9.99% stake 

The date: April 22, 2020. 

The amount: $5.7 billion (Rs 43, 574 crores).

Expectation: There is talk of a"super app" that would be created by a unified effort of both the two conglomerates, although it is still in nascent stages, which would bring many more e-commerce services under one roof leveraging Facebook’s reach in the future. 

Along with communication and transactions, it will also eventually aim to serve as a hub for entertainment, content and gaming.

Everything about the deal here.


Silverlake, 1.15% stake

The date: May 4, 2020

The amount: $747 million (Rs 5,655.75 crores).

Expectation: Silver Lake has also invested billions of dollars in Twitter, Expedia, Airbnb, and Waymo. These are companies highly rated in the emerging economy. So for Silver Lake to pick a stake in Jio Platforms reflects the fact that it sees Jio as a valuable player in the digital world. 

India is a huge emerging market and Silver Lake is only one of many major investors in the Indian economy.

Everything about the deal here.

Vista, 2.32% stake

The date: May 8, 2020.

The amount: $1.5 billion (Rs. 11,367 crores).

Expectation: Vista is a leading global investment firm focused on enterprise software, data and technology-enabled companies. Vista has more than $57 billion in cumulative capital commitments and its global network of companies collectively represent the 5th largest enterprise software company in the world. Through this deal, Vista hopes to expand the reach of its portfolio companies’ products and services in India, the world’s second-largest internet market.

Everything about the deal here.

General Atlantic, 1.34% stake 

The date: May 17, 2020.

The amount: $870 million (Rs 6,598.38 crores).

Expectation: General Atlantic had previously made strategic investments in high-profile companies like Facebook, Alibaba, Airbnb, Slack, Ant Financial, ByteDance, Snapchat and Box. General Atlantic was attracted by Jio’s content play platform with their broadband connectivity reach.

Apparently, General Atlantic was also impressed with the opportunities around health care that Jio brings along with it.

Everything about the deal here.

KKR, 2.32% stake

The date: May 22, 2020.

The amount: $1.5 billion (Rs 11,367 crores).

Expectation: KKR has a long history of building leading global enterprises and successfully investing in businesses in the technology sector, including BMC Software, ByteDance and GoJek through its private equity and technology growth funds. This investment seen as a strong indicator of KKR’s commitment to supporting leading technology companies in India and Asia Pacific. 

The firm has invested more than $30 billion across over 20 tech companies.

Everything about the deal here.

What's ahead?

By raising $10.35 billion in just over a month by selling about 17% of its stake, Jio Platforms is hoping to throughly dominate the  world’s second-largest internet market.

And what more, it has a few more investments waiting to flow in. With the potential listing at Nasdaq, Jio Platforms has the makings to become a world leader in its domain. The first from India, if and when it happens.

When Prime Minister Narendra Modi is calling for Indian public to be "vocal for local", and Indian company is getting vocal to go global. 

0 comments:

Post a Comment

!!!!!!!!!!

Popular Posts

Blog Archive