Mukesh Ambani courted the seventh major investor for its telecommunications business in as many weeks.
Sunday, Reliance Jio The platforms have announced that they will sell a 1.16% stake for $ 750 million to the Abu Dhabi Investment Authority (ADIA), continuing its string of eye-catching investments at the height of a global pandemic.
The three and a half year old digital unit of retail oil giant Reliance Industries, India’s most valuable business has now garnered nearly $ 13 billion from seven investors, including Facebook and US private equity firms Silver Lake and General Atlantic, by selling almost 20% of the shares.
The announcement made today by ADIA, one of the world’s largest investors, is the third agreement that Reliance Jio Platforms, India’s largest telecommunications operator with more than 388 million subscribers, secured this week.
Jio Platforms, valued at $ 65 billion, announced earlier this week that it is selling $ 1.2 billion to sovereign Abu Dhabi-based Mubadala. On Friday, he also announced that US private equity firm Silver Lake is injecting an additional $ 600 million to increase its stake in Jio to 2.1%.
The deal also captures the growing appeal of Jio Platforms for foreign investors seeking a share of the world’s second largest Internet market. Jio, which launched its commercial operations in the second half of 2016, revolutionized the telecommunications market in India by offering mobile data and voice calls at reduced prices.
“Historical 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 over the price. They often lower their prices – sometimes sharply – to reduce their attractiveness. Newcomers often complain to regulators about the anti-competitive practices of incumbent operators, “said Mahesh Uppal, director of communications consultancy Com First.
“In India, the opposite happened. These are the existing players who rushed to the regulators to file a complaint. So we noticed a major miscalculation on the part of the players in place who had already missed an important stage before the launch of Jio, “he said.
India has become one of the biggest battlegrounds in the world for Silicon Valley and Chinese companies looking to win over the country’s 1.3 billion people, most of whom remain without a smartphone or Internet connection.
Media has said in recent weeks that Amazon plans to buy at least $ 2 billion in stakes in India’s third-largest telecom operator Bharti Airtel, while Google has been discussing a similar agreement in Vodafone Idea, the second largest telecommunications operator.
Hamad Shahwan Aldhaheri, who oversees private equity transactions at ADIA, said Jio Platforms is poised to benefit from major socio-economic developments and the “transformative effects of technology on the way people live and work” .
“The rapid growth of the company, which has established itself as a market leader in just four years, has been built on solid experience in strategic execution. Our investment in Jio is a further demonstration of ADIA’s ability to draw on in-depth regional and sectoral expertise to invest globally in market-leading companies and alongside proven partners, ”he said. he adds.
New Capital Should Help India’s Richest Man Ambani Strengthen Commitment To Investors When Pledged To Reduce Reliance’s Net Debt From About $ 21 Billion To Zero here in early 2021, said Uppal of Com First. The company had no debt in 2012, but things changed when it ran to build Jio.
In addition, Reliance Industries’ core business – petroleum refining and petrochemicals – has been hit hard by the coronavirus epidemic. Its net profit for the quarter ended March 31 decreased by 37%.
“I am delighted that ADIA, with its track record of over four decades of successful long-term value investing around the world, is partnering with Jio Platforms in its mission to bring India to digital leadership and generate inclusive growth opportunities. This investment is a solid endorsement of our strategy and the potential of India, “said Ambani.