Facebook Acquires 10% Stake in Jio Platform for Rs 43,574 Crore, Becomes Largest Minority Shareholder

New Delhi, Apr 22:  Facebook on Wednesday announced an investment of USD 5.7 billion (Rs 43,574 crore) to buy a ten per cent stake in Jio Platforms Limited (JPL), the firm that houses Mukesh Ambani's telecom arm Jio, with the social media giant looking to expand its presence in its largest market as per its subscriber base. 

"Today we are announcing a USD 5.7 billion, or Rs 43,574 crore, investment in Jio Platforms Ltd, part of Reliance Industries Ltd, making Facebook its largest minority shareholder," the company said in a statement.

In a separate statement, Reliance said that the investment by Facebook values Jio Platforms at Rs 4.62 lakh crore pre-money enterprise value (USD 65.95 billion, assuming a conversion rate of Rs 70 to a US dollar). "Facebook's investment will translate into a 9.99 per cent equity stake in Jio Platforms on a fully diluted basis," it said.

Jio Platforms, a wholly-owned subsidiary of Reliance Industries Ltd (RIL), houses the digital services of the group. Reliance Jio Infocomm Ltd, with 388 million subscribers, is a wholly-owned subsidiary of Jio Platforms.

The Facebook deal is part of value unlocking by RIL to cut debt. RIL has been seeking strategic partnerships across its businesses while targeting to deleverage its balance sheet.

It has been talking to Saudi Aramco for sale of a 20% stake in its oil-to-chemical business for an asking price of USD 15 billion. RIL has already tied up with BP Plc, the oil and gas multinational, for its fuel business.

Jio had also been reportedly in touch with Google but the fate of those discussions is not known.

 Facebook already has over 400 million WhatsApp users in India and is looking to launch a payment offering. Having a local partner could help it in navigating various regulatory issues, including those related to privacy and local storage.

Since it launched in 2016,  Jio has emerged as the top telecom operator in India, both in terms of traffic as well as revenue in virtually a two-player market since the third player, Vodafone-Idea is struggling under regulatory burden. Jio's main competitor is Bharti Airtel.

Facebook said the investment "underscores our commitment to India, and our excitement for the dramatic transformation that Jio has spurred in the country".

"In less than four years, Jio has brought more than 388 million people online, fueling the creation of innovative new enterprises and connecting people in new ways. We are committed to connecting more people in India together with Jio," it added.

Together with WhatsApp and Instagram, Facebook is estimated to have more users in India than in any other single country.

The number of internet users in India is projected to rise to about 850 million in 2022, according to consultancy PwC, up from 450 million in 2017.

"The partnership between Facebook and Jio is unprecedented in many ways. This is the largest investment for a minority stake by a technology company anywhere in the world and the largest FDI in the technology sector in India," RIL said.

"The investment values Jio Platforms amongst the top 5 listed companies in India by market capitalisation, within just three-and-a-half years of launch of commercial services, validating RIL's capability in incubating and building disruptive next-generation businesses, while delivering market defining shareholder value," the statement said.

RIL said that concurrent with the investment, Jio Platforms, Reliance Retail Ltd and WhatsApp have also entered into a commercial partnership agreement. This is to further accelerate Reliance Retail's new commerce business on the JioMart platform by using WhatsApp. 

JioMart provides consumer access to the nearest small merchant and kirana shops.

Morgan Stanley as a financial advisor and AZB & Partners and Davis Polk & Wardwell acted as counsels and advised RIL on the transaction.