Mukesh Ambani has courted the seventh major investor for its telecommunications business in just as many weeks.
Sunday Reliance Jio Platforms announced it will sell a 1.16% stake to the Abu Dhabi Investment Authority (ADIA) for $ 750 million to continue its eye-catching investments at the height of a global pandemic.
The three and a half year old digital unit of the oil-to-retail giant Reliance Industries, The most valuable company in India has now secured nearly $ 13 billion from seven investors, including Facebook and U.S. private equity firms Silver Lake and General Atlantic, by selling nearly 20% of the shares.
Today's announcement from ADIA, one of the world's largest investors, is Reliance's third deal Jio Platforms, India's largest telecommunications operator with over 388 million subscribers, secured this week.
Jio Platforms, valued at $ 65 billion earlier this week, announced that it had sold $ 1.2 billion to Abu Dhabi-based state-owned company Mubadala. On Friday, the company also announced that US private equity firm Silver Lake pumps another $ 600 million to increase its stake in Jio to 2.1%.
The deal underscores the growing appeal of Jio Platforms for foreign investors looking for part of the world's second largest Internet market. Jio, which started operations in the second half of 2016, stimulated the telecommunications market in India by offering mobile data and voice calls at affordable prices.
“The established players (Airtel, Vodafone, Idea, BSNL) in India have done the opposite of what companies do in their position elsewhere in the world when a new player appears on the market. Existing players expect the newcomer to compete aggressively for the price. They often lower their prices – sometimes sharply – to make them less attractive. Newcomers often complain to regulators about anti-competitive practices by established companies, ”said Mahesh Uppal, director of communications consultancy Com First.
“The opposite has happened in India. It was the existing players who ran to the regulators with complaints. So we saw a big misjudgment from established players who hadn't taken a major step before Jio started, ”he said.
India has become one of the largest global battlegrounds for Silicon Valley and China companies looking to attract the country's 1.3 billion people, most of whom remain without a smartphone or internet connection.
Media reports have claimed over the past few weeks that Amazon is considering buying shares in Bharti Airtel, India's third largest telecommunications operator, worth at least $ 2 billion, while Google has had talks about a similar deal with Vodafone Idea, the second largest telecommunications operator .
Hamad Shahwan Aldhaheri, who oversees private equity operations at ADIA, said Jio Platforms is ready to capitalize on key socio-economic developments and “transformative effects of technology on the way people live and work”.
“The rapid growth of the company, which has established itself as the market leader in just four years, is based on a strong track record of strategic implementation. Our investment in Jio is further evidence of ADIA's ability to draw on strong regional and sectoral expertise to invest in leading companies around the world and alongside proven partners, ”he added.
The new capital was intended to help Ambani, India's richest man, further strengthen his commitment to investors when he promised to reduce Reliance's net debt from approximately $ 21 billion to zero in early 2021, Com First said. The company had no debt in 2012, but things changed when it came to building Jio.
In addition, the core business of Reliance Industries – oil refining and petrochemicals – was hard hit by the outbreak of the corona virus. Net income for the quarter ended March 31 declined 37%.
“I am delighted that ADIA, with its success story of more than four decades of successful long-term value investments around the world, is working with Jio Platforms to lead India to digital leadership and generate inclusive growth opportunities. This investment is a strong confirmation of our strategy and India's potential, ”said Ambani.