Facebook buys 9.99% stake in Reliance Jio for Rs 43,574 crore

Reliance Industries, Jio Platforms and Facebook, Inc. (‘Facebook’) announced the signing of binding agreements for an investment of Rs 43,574 crore by Facebook into Jio Platforms. Facebook’s investment will translate into a 9.99% equity stake in Jio Platforms on a fully diluted basis. This investment by Facebook values Jio Platforms at Rs 4.62 lakh crore pre-money enterprise value ($65.95 billion, assuming a conversion rate of Rs 70 to a US Dollar).

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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. The investment values Jio Platforms amongst the top five listed companies in India by market capitalisation, within just three and a half years of the launch of commercial services.

Mark Zuckerberg, Co-Founder and Chief Executive of Facebook, said in a Facebook post, “There's a lot going on in the world right now, but I wanted to share an update on our work in India. Facebook is teaming up with Jio Platforms -- we're making a financial investment, and more than that, we're committing to working together on some major projects that will open up commerce opportunities for people across India.”

Commenting on the partnership with Facebook, Mukesh Ambani, Chairman and Managing Director, Reliance Industries, said, “When Reliance launched Jio in 2016, we were driven by the dream of ‘India’s Digital Sarvodaya’– India’s Inclusive ‘Digital Rise’ to improve the quality of life of every single Indian and to propel India as the world’s leading Digital Society. All of us at Reliance are therefore humbled by the opportunity to welcome Facebook as our long-term partner in continuing to grow and transform the digital ecosystem of India for the benefit of all Indians.”

He further said, “The synergy between Jio and Facebook will help realise Prime Minister Narendra Modi’s ‘Digital India’ Mission with its two ambitious goals — ‘Ease of Living’ and ‘Ease of Doing Business’ – for every single category of Indian people without exception. In the post-Corona era, I am confident of India’s economic recovery and resurgence in the shortest period of time. The partnership will surely make an important contribution to this transformation.”

Concurrent with the investment, Jio Platforms, Reliance Retail Limited (“Reliance Retail”) and WhatsApp have also entered into a commercial partnership agreement to further accelerate Reliance Retail’s New Commerce business on the JioMart platform using WhatsApp and to support small businesses on WhatsApp.

WhatsApp already plays an important role in helping people and businesses connect in India. Reliance Retail’s New Commerce platform, JioMart, is being built in partnership with millions of small merchants and kirana shops to empower them to better serve the needs of Indian consumers. The companies will work closely to ensure that consumers are able to access the nearest kiranas who can provide products and services to their homes by transacting seamlessly with JioMart using WhatsApp.

Jio Platforms, a wholly-owned subsidiary of Reliance Industries, is a next-generation technology company building a ‘Digital Society’ for India by bringing together Jio’s leading digital apps, digital ecosystems and India’s #1 high-speed connectivity platform under one umbrella.

Reliance Jio Infocomm, which provides connectivity platform to over 388 million subscribers, will continue to be a wholly-owned subsidiary of Jio Platforms. Jio’s vision is to enable a Digital India for 1.3 billion Indians and Indian businesses, especially small merchants, micro-businesses and farmers.

The statement released by RIL said, “The partnership assumes special significance for India in the wake of the severe disruptions caused by the coronavirus pandemic in the Indian — and the global — economy. In the post-Covid era, comprehensive digitalisation will be an absolute necessity for the revitalisation of the Indian economy. It is our common belief and commitment that no Indian should be deprived of the tremendous new opportunities, including opportunities for new employment and new businesses, in the process of India’s 360-degree digital transformation.”

The transaction is subject to regulatory and other customary approvals. Morgan Stanley as financial advisor and AZB & Partners and Davis Polk & Wardwell as counsels advised on the transaction.

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