US tech giant Facebook announced that it would invest Rs 43,547 crore ($5.7 billion) in RIL’s wholly-owned subsidiary Jio Platforms to expand its presence in India.
Facebook’s investment translates into 9.9 per cent stake in Jio. This would be Facebook’s biggest minority shareholding ever. This is also the largest foreign direct investment for minority investment in India.
The company said, “Today we are announcing a $5.7 billion, or INR 43,574 crore, investment in Jio Platforms Limited, part of Reliance Industries Limited, making Facebook its largest minority shareholder.”
The investment by Facebook values Jio Platforms at Rs 4.62 trillion pre-money enterprise value ($65.95 billion, assuming a conversion rate of Rs 70 to a US Dollar).
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Reliance Jio, a wholly-owned subsidiary of Reliance Industries, has been the fastest-growing telecom network in the country since its launch in 2016. Jio has more than 388 million customers in India.
The company added, “Our goal is to enable new opportunities for businesses of all sizes, but especially for the more than 60 million small businesses across India.
They account for the majority of jobs in the country, and form the heart and soul of rural and urban communities alike. In the face of the coronavirus, it is important that we both combat this global pandemic now, and lay the groundwork to help people and businesses in the years to come.”
Facebook said that its focus would be to create ways for people and businesses to operate more effectively in a digitally growing economy. WhatsApp and Instagram, which are now a major part of lives of Indian people, are also owned by Facebook.
As Facebook, the world’s largest social media company, invests $5.7 billion for a 9.99 per cent stake in Reliance Jio Platforms, the deal is also seen as a powerful alliance to take on formidable players in e-commerce and payments space such as Amazon, Flipkart and Google.
The partnership is expected to help Mukesh Ambani-led Reliance’s e-commerce venture JioMart to take on players such as Amazon and Flipkart in the Indian online commerce market, backed by Facebook.
According to industry insiders and analysts, the market opportunities for online commerce in the country is expected to touch $200 billion by 2028 from $30 billion in 2018.
[splco_quote]“(Out of the investment made by Facebook) about Rs 15,000 crore would remain with Jio, and this is a huge amount which JioMart can use for building its (e-commerce) network. If they are able to execute this properly on the ground, I think they are going to create massive problems for the likes of Amazon and Flipkart due to the kind of scale that they can achieve,” said Satish Meena, a senior forecast analyst at Forrester Research.[/splco_quote]
