It has been a little more than a month when Reliance Jio signed its first foreign investment with Facebook on April 23. The US-based social media giant invested 6 billion dollars in Jio for 9.9 percent stakes, at a valuation of around 60 billion dollars for Reliance’s telecom and e-commerce arm.
Since the initial investment from Facebook, Jio has already bagged four investment deals from various American equity investment firms. Silver lake, one of the largest tech investment firms in the world, picked up 1.15 percent stake while Vista equity, General Atlantic, and KKR picked up 2.23, 1.34, and 2.23 percent respectively.
Now, the company is eying for a big investment from another big American technology giant- Microsoft- but at a bigger value. As per a report by Hindustan Times, Microsoft is planning to invest 2 billion dollars for 2.5 percent stakes in the company. “Microsoft has been in discussions with several players in the digital payments services space. With Reliance, Microsoft is interested in buying more than a 2.5% stake in Jio Platforms.”
The previous five investments in the company were at a market valuation of 60 billion dollars for the RIL’s telecom and e-commerce arm, which Mukesh Ambani is planning to list as a separate entity at American stock exchange.
All the five investments are from American technology or investment companies and sixth investment is also from an American tech giant. The listing of the company at the American stock exchange could bring bigger value for Reliance Jio than Bombay Stock Exchange. Aware of this, Ambani is popularizing the company in American technology and finance circles through big-ticket investment from tech and equity giant.
The unique aspect of Microsoft deal is that the company is planning to invest 2 billion dollars for 2.5 percent stakes, which takes the valuation of Reliance Jio at 80 billion dollars, 20 billion dollars more than at the time investment from Facebook a month ago.
If we go by the figures in the media reports, the valuation of Jio surged 20 billion dollars or around 33 percent in a little more than a month. Till Ambani lists Jio at American stock exchange, which is expected to go by next years, the company’s valuation would probably cross 100 billion dollars already.
Apart from Microsoft, various other international investors including sovereign wealth funds- which look for long term investments- are planning to buy stakes in Jio. Abu Dhabi’s Mubadala and Saudi Arabia’s Public Investment Fund (PIF) are looking to invest 1.2 billion dollars and 1.5 billion dollars, as per reports from FT and Bloomberg.
The investment from Microsoft would take the relations between two giants, established in August last year when the companies announced that Microsoft’s cloud platform, Azure, would host Jio’s data on its servers in India. “Our long term partnership combines the power of Azure, Azure AI and Office 365 with Jio’s connectivity and digital solutions, which are among the most used and fast growing in the world,” said Microsoft CEO Satya Nadella last year.
Mukesh Ambani aims to collaborate with Microsoft on various fronts for the functioning of Jimart, the e-commerce platform on which Ambani is betting big. With 39 crore subscribers across the country, Jio aims to connect the Kirana stores and other MSMEs through the internet on its e-commerce platform.
“Our opportunity between Jio and Microsoft is to give them [MSMEs] full service, to make sure that they are fully enabled with all the toolsets and data sets. Because the mindset exists to really propel India forward. And, that is an even bigger opportunity than the consumer piece that we have been in the last few years,” Ambani told Nadella last year.
Ambani has already sold 17.1 percent stake in Jio to investors, and is willing to sell more as he promised to RIL’s investors to make the company debt-free in next few years. The company has a gross debt of around 40 billion dollars and net debt of around 20 billion dollars.
Ambani has already grabbed investment worth around 10 billion dollars in last one month, and with a few more deals in upcoming days, he could easily cut-off the company’s debt to zero, as promised to investors.
