Jio Platforms has gotten a second investment from Menlo Park, California. American private equity firm Silver Lake will invest Rs 5,655.75 crore in Jio Platforms (~US$747 million), RIL announced the investment today in a press release. Jio platforms is the holding entity for Jio and Reliance Industries Limited’s digital ventures. This comes mere weeks after Facebook announced its $5.7 billion stake in the holding, in exchange for a 9.9% stake. Reliance said Silver Lake’s investment represents a “12.5% premium to the equity valuation of the Facebook investment”, which stands at Rs 4.90 lakh crore.
Silver Lake has invested in companies like Airbnb, Alibaba, Ant Financial, Alphabet’s Verily and Waymo units, Dell Technologies, and Twitter.
In its earnings call for Q4FY2019–20, RIL had said that investments similar to size in Facebook were going to follow in the coming months. A key part of Jio Platforms in addition to the Jio network is JioMart, the grocery home delivery service that will be closely integrated with Facebook’s WhatsApp, which 400 million people have installed in India.
- Increased focus on telecom and B2C: Reliance is preparing to selling off a significant oil and petrochemicals wing, worth tens of billions of dollars. Now that telecom and home delivery are among the few industries which are likely to survive the throes of this pandemic, the company’s focus on telecom is likely to intensify. With its own $21 billion infusion into Jio Platforms and Facebook’s capital, the company is likely to double down on these businesses. Its existing retail network and size will help it scale.
- Will Jio deliver? As JioMart pilots in Maharashtra, Jio’s integration with WhatsApp will determine the shape of things to come. Under normal circumstances, JioMart would be a calculated risk with all the competition in place. But Jio’s resources and a sharp uptick in preference for home delivered groceries should give Jio a solid opportunity to make a mark here, and make it fast; in its earnings call yesterday, the company said it would accelerate JioMart’s deployment in the coming months. What’s more, groceries have driven Reliance Retail’s growth in the past quarter (with a year-over-year growth of 107%), so home delivery should boost those revenues further.