Private equity firm Vista Equity Partners said on Friday it will invest $1.5 billion in Reliance Jio Platforms, joining social conglomerate Facebook and Silver Lake that have also made bets on the Indian telecom giant in recent weeks.
The planned announcement, which would give the U.S.-headquartered software-focused buyout firm Vista Equity Partners a 2.32% stake in Reliance Jio Platforms, values India's top telecom operator at $65 billion (equity valuation) -- the same valuation implied by the Silver Lake investment and a 12.5% premium over Facebook's deal, the Indian firm said.
In the last three weeks, Reliance Jio Platforms has announced plans to sell about 13.4% stake in the firm to Facebook, private equity firm Silver Lake, and Vista Equity Partners for about $8 billion.
Launched in the second half of 2016, Reliance Jio upended India's telecommunications industry with cut-rate data plans and free voice calls. Jio Platforms, a subsidiary of Reliance Industries (India's most valued firm), operates the telecom venture, called Jio Infocomm, that has amassed 388 million subscribers since its launch to become the nation’s top telecom operator.
Reliance Industries, which makes most of its profits from oil refining and petrochemicals, said on Friday that it aims to make Jio Platforms, in which it has poured more than $30 billion over the years, "a global technology leader and among the leading digital economies in the world."
At an equity valuation of Rs 4.9 lakh crore with Silver Lake deal, Jio Platforms will tie with Hindustan Unilever as the fourth most valued company in India. Parent Reliance and TCS far ahead. HDFC Bank next? pic.twitter.com/DmpTDxcNlH
— Madhav Chanchani (@madhavchanchani) May 4, 2020
Vista, which began investing in software industry 20 years ago and has cut checks to more than four dozen firms, said it would explore ways to expand the reach of its portfolio companies' products and services in India. Some of its portfolio firms already have significant presence in India, the world's second largest internet market, said Vista.
"We are excited to leverage the professional expertise and multi-level support that Vista has been offering to its investments globally for the benefit of Jio,” said Reliance Industries Chairman Mukesh Ambani, in a statement.
The new commitment would help Ambani, India's richest man, further cement his last year’s commitment to investors when he said he aimed to cut Reliance’s net debt of about $21 billion to zero by early 2021. Its core business -- oil refining and petrochemicals -- has been hard hit amid the coronavirus outbreak. Its net profit in the quarter that ended on March 31 fell by 37%.
In the company’s earnings call last month, Ambani said several firms had expressed interest in buying stakes in Jio Platforms in the wake of the deal with Facebook.
— BK (@drinkcircle) May 8, 2020
Facebook said that other than offering capital to Jio Platforms for a 9.99% stake in the firm, it would work with the Indian giant on a number of areas starting with e-commerce. Days later, JioMart, an e-commerce venture run by India’s most valued firm, began testing an “ordering system” on WhatsApp, the most popular smartphone app in India with over 400 million active users in the world’s second largest internet market.
In a statement, Robert F. Smith, founder, chairman and CEO of Vista, said, “We believe in the potential of the Digital Society that Jio is building for India. Mukesh’s vision as a global pioneer, alongside Jio’s world-class leadership team, have built a platform to scale and advance the data revolution it started."
Reliance Jio Platforms also owns a suite of services including music streaming service JioSaavn (which it plans to take public), smartphones, broadband business, on-demand live television service JioTV and payments service JioPay.