Facebook Picks 9.9% Stake in Reliance Jio for $5.7 bn
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Social media giant Facebook on Wednesday announced an investment of INR 43,574 crore ($5.7 bn) in Reliance Jio Platforms, a subsidiary of Reliance Industries (RIL), for a stake of 9.9 per cent.
This is the largest Foreign Direct Investment (FDI) in technology sector in the country and will value Jio Platforms at INR 4.62 lakh crore ($65.95 bn), as per the company statement. “The investment values Jio Platforms amongst the top five listed companies in India by market capitalization, within just three and a half years of launch of commercial services,” Mukesh Ambani-owned RIL said in a statement.
The deal comes at an opportune time for RIL which has been trying to aggressively cut the massive INR 1.53 lakh crore debt, as it targets to become a net debt free company by March 2021. Last year, Reliance signed a deal with BP for a new fuel retail joint venture, owing to which the London-based oil and gas major would pay INR 7,000 crore to the company. Separately, the Indian conglomerate had also announced a 20 per cent stake sale in its refining and petrochemicals business for $15 billion to Saudi Aramco, a deal that could be set to the test considering the recent fall in oil prices.
Additionally, Canada's Brookfield Infrastructure Partners agreed to invest INR 25,215 crore into Reliance's telecom tower assets.
Digital Based Solutions For Small Businesses
Through the partnership, both companies aim to create new opportunities for small businesses in India by enabling them to reach more customers digitally.
“Our focus will be India’s 60 million micro, small and medium businesses, 120 million farmers, 30 million small merchants and millions of small and medium enterprises in the informal sector, in addition to empowering people seeking various digital services,” the business house stated.
The company believes the partnership is significant at a time when COVID-19 has caused severe disruptions in the global economy and digitization will play a key role in revitalising it. “In the post-Corona era, I am confident of India’s economic recovery and resurgence in the shortest period of time. The partnership will surely make an important contribution to this transformation,” said Chairman and MD Mukesh Ambani in the statement.
In a post on Facebook, Mark Zuckerberg iterated that the main focus of the partnership is to get millions of small businesses online. “India has more than 60 million small businesses and millions of people rely on them for jobs. With communities around the world in lockdown, many of these entrepreneurs need digital tools they can rely on to find and communicate with customers and grow their businesses. This is something we can help with -- and that's why we're partnering with Jio to help people and businesses in India create new opportunities.”
India is home to the largest communities on Facebook and WhatsApp, Zuckerberg stated.
WhatsApp Partners With JioMart for Hyperlocal Deliveries
In addition to the investment, Facebook-owned WhatsApp has entered into a commercial partnership with RIL’s e-commerce platform JioMart. The partnership aims to create hyperlocal delivery network by connecting small businesses and Kiranas on JioMart with customers using WhatsApp.
“Reliance Retail’s New Commerce platform, JioMart, is being built in partnership with millions of small merchants and kirana shops to empower them to better serve the needs of Indian consumers. The companies will work closely to ensure that consumers are able to access the nearest kiranas who can provide products and services to their homes by transacting seamlessly with JioMart using WhatsApp,” the company stated.
WhatsApp has over 400 million users in India, making it the company’s biggest market.
Ambani said JioMart and WhatsApp together will empower nearly 3 crore small Kirana shops to digitally transact with every customer in their neighborhood. “This means all of you (customers) can order and get faster delivery of day-to-day items from nearby local shops. At the same time, small Kiranas can grow their businesses and create new employment opportunities using digital technologies.”
WhatsApp had rolled out its payment feature Pay in February this year after a two-year long struggle to get regulatory approval. Experts believe that WhatsApp Pay will be a game changer in B2C payments space in India, posing serious competition to the likes of Google Pay, Paytm and PhonePe.