India's Jio Platforms raises over $10 bil. after KKR invests $1.5 bil.

22, May. 2020

Photo by rupixen.com on Unsplash
Photo by rupixen.com on Unsplash

By Atul Ranjan

NEW DELHI, NNA - India’s leading telecom operator and digital services firm, Jio Platforms Ltd., has raised 785.62 billion rupees ($10.35 billion) within a month after selling about 17 percent of its stake to the big names of American tech investors.

The latest to rush in to grab a piece of Jio Platforms is private equity firm KKR & Co. On Friday, it announced an investment of 113.67 billion rupees ($1.5 billion) for a 2.32 percent stake.

This is KKR’s largest investment in Asia and the transaction values Jio Platforms, a wholly-owned subsidiary of Reliance Industries Ltd., at an equity value of 4.91 trillion rupees and an enterprise value of 5.16 trillion rupees, according to a joint statement by Reliance and Jio Platforms.

Its plan to capture the sizeable Indian market has captivated investors after its huge success in the mobile business and growing array of innovative digital services.

In late April, Facebook was the first to pay $5.7 billion for a 10 percent stake in Jio Platforms and a strategic partnership to grow e-commerce on its social media platforms.

This fueled even more interest by global tech investors. Hopping quickly onto the bandwagon were Silver Lake, Vista Equity and General Atlantic which invested between $750 million and $1.5 billion.

Henry Kravis, co-founder and co-CEO of KKR, said, “Few companies have the potential to transform a country’s digital ecosystem in the way that Jio Platforms is doing in India, and potentially worldwide. Jio Platforms is a true homegrown next generation technology leader in India that is unmatched in its ability to deliver technology solutions and services to a country that is experiencing a digital revolution."

KKR's current international portfolio includes more than 20 companies across the technology, media and telecom sectors.

Welcoming KKR as the latest partner, Mukesh Ambani, chairman and managing director of Reliance Industries, said, “KKR has a proven track record of being a valuable partner to industry-leading franchises and has been committed to India for many years.

We are looking forward to leveraging KKR’s global platform, industry knowledge and operational expertise to further grow Jio.”

On the strong appeal of Jio Platforms, Tarun Pathak, an associate director for India office of research firm Counterpoint Research, said the uniqueness of its winning feature has put it ahead of the game.

Jio boasts an ecosystem encompassing key elements of connectivity, communication, content and commerce while offering a convenient array of digital services, Pathak explained.

“Most telcos across the globe control connectivity and/or retail part of the overall digital value chain. Some telcos also control or influence the hardware or device element while some Chinese telcos also own the cloud ecosystem. Jio is the only company that is omnipresent across all of them. It owns the digital ecosystem right from the network, devices and apps to retail. So Jio is much more than just a telecom firm now, it is a technology firm," said Pathak.

But on top of the value chain Jio Platforms manages to control, it has woven a digital layer of services covering all aspects, he noted.

"It positions Jio Platforms to leverage the daily digital consumption patterns of over a billion Indian consumers. The investors are attracted to the platform and scale it is likely to provide especially when 300 million new smartphone users are likely to embrace digital platforms in the next five years," said Pathak.