Facebook buys $ 9.99 per cent stake in Reliance Jio for $ 5.7 billion


New Delhi: Facebook will buy a 10% stake in Reliance Industries’ digital business for $ 5.7 billion, as the social media firm leverages its highly popular WhatsApp chat service to offer digital payment services.
The deal will help the Indian group’s severed debt, which has piled into its expensive push to secure the top position for its Jio Infocomm telecom business.

Facebook’s investment in Jio Platforms Ltd will make it the largest minority shareholder, Jio said in a statement on Wednesday, adding the enterprise value of the business is approximately $ 66 billion. Jio Platforms includes a host of Reliance’s digital assets, including Jio Infocomm.

WhatsApp is trying to secure approval to roll out its digital payment service in India, which will make it compete with the likes of Google Pay and Paytm in a crowded market. A Facebook spokesperson said approval to expand beyond the beta launch has not yet come.

The messaging service has 400 million users in India, its largest market, reaching about 80% of smartphone users in the country. The deal will help social media giant WhatsApp to partner with Reliance’s e-commerce marketplace JioMart, which connects small businesses to customers.

Facebook founder CEO Mark Zuckerberg said in a post, “(India) is in the midst of a major digital transformation and organizations like Jio have played a big role in bringing millions of Indian people and small businesses online.”

For Reliance, whose debt pile exceeded $ 40 billion by September, the partnership will bring much-needed funds to make good on its promise to cut net debt by March 2021.

Reliance Industries, controlled by billionaire Mukesh Ambani, has also decided to sell a fifth of its oil and chemical refining business to Saudi Arbo for about $ 15 billion, and a stake in its telecom tower assets to Canadian private equity firm Brookfield Assist Management for $ 3 More than. Billion.

While Jio has become the largest wireless operator in the country within about three years of its launch, Mumbai-headquartered Reliance has also rapidly expanded its retail business, which now includes 10,000 sales of groceries, consumer electronics, and apparel. There is more than one store.

The revenues of these two businesses together exceeded 25% in the December quarter.

Last month, the Financial Times reported that Facebook was negotiating for a 10% stake in Jio, but negotiations stalled due to a global travel ban amid the outbreak of coronovirus.

Jio said Morgan Stanley was the financial advisor on the deal. AZB and Partners, and Davis Polk and Wardwell were counselels.