Jio Platforms Bags USD 20 Billion in One of the Biggest Fundraising Sprees Ever!

Reliance Industries, one of India’s biggest conglomerates, is on a roll. The company is living up to the promise of Chairman and Managing Director Mukesh Ambani (the richest man in Asia with a net worth of US$81.4 billion as of 24 July 2020) to make the company debt-free. Foreign investment has started pouring in, starting with Facebook. Other investors soon followed suit, and now 10+ global investors have brought up approximately 25.09% stake in Jio Platforms. The timing of this fund raising exercise is vital amidst a raging global pandemic which has pushed millions of businesses to the brink of closure and an uncertain future.

Total investment value in Reliance Industries came close to INR 1.18 lakh crore (USD 20 billion approx.). The principal investors are as follows. Facebook Inc invested 5.7 billion USD, while Silver Lake partners invested 750 million USD and 600 million USD (in May and June 2020, respectively). Vista Equity Investors invested 747 million USD, and General Atlantic invested 873 million USD. KKR invested 1.5 billion USD, while TPG Capital invested 600 million USD. L Catterton invested 250 million USD bringing up the number of USA based investors to 8. Public Investment Fund from Saudi Arabia invested 1.49 billion USD. Mubadala (Abu Dhabi) and Abu Dhabi Investment Authority invested 1.2 billion USD and 750 million USD. Qualcomm Ventures plans to invest 10 million USD in Jio, making it the 12th investor. Earlier this month, Google pumped in USD 4.5 billion for a 7.7 percent stake. As per various reports, even Microsoft plans to pump in USD 2 billion into Jio Platforms.

New Services On The Anvil

The fact that so many global investors chose Reliance should have driven share prices up through the roof. Surprisingly, around 15 July share prices fell by 3.8%. Still, Reliance is buoyant with Mukesh Ambani raising the curtain on a vast range of ambitious services:

5G – Google and Jio plan to build an operating system to power 4G/5G phones
Video streaming to bring in Amazon Prime, Netflix, and Disney among others

Mukesh Ambani’s goal is to offer genuinely global digital products and make Reliance on the international leader in its operational sectors. The company plans to revolutionize the retail, content streaming, digital payments and education, and healthcare segments.

Taking On Goliaths

The Facebook tie-up and resultant access to Whatsapp are likely to boost Jiomart operations to a level that they can take on global top e-commerce giant Amazon and Walmart’s Flipkart.

Google, Facebook, and others see Jio as a possible backdoor entry to smoothen the regulatory process. Ambani’s political clout is likely to help navigate their way through red tape and operational delays.

Ambitious Plans

Reliance has ambitious plans to build an indigenous 5G ecosystem. Further, it plans to leverage WhatsApp to help JioMart rope in local retail shops to increase their sales numbers. Jio Glass is another project that will help teachers and students get together in 3D virtual rooms. Technical competence in Narrowband IoT.

A Monopoly In The Offering?

The tie-up with a dozen companies, including Qualcomm, Google, and Facebook, holds great promise. However, with Jio Platforms becoming stronger by the day, it raises the question of Jio becoming a monopoly. Its competitors Idea-Vodafone and Airtel, are in dire straits to put it across mildly. At one time, there were 10 contenders in the Indian market, and now there are just three. With questions arising about two other contender’s long term viability in the market, there is speculation about Jio becoming a monopoly. The global tie-ups and robust foreign investment flow further reinforce these predictions. It is ironic that Mukesh Ambani, who, at one time, warned against data colonization, is now all set to follow the same route.

It must be remembered that Mukesh Ambani’s Jio started by offering virtually free 4G for several months to subscribers, thereby pushing established players to the brink of bankruptcy. After that, it offered low rate plans to lure customers, and now that it is established, Jio has raised its 4G plan rates. Trade pundits predict that a monopoly could see Jio setting terms and milking customers in the future!

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