India’s Reliance Jio Platforms sells $1.5 billion stake to Saudi Arabia’s Public Investment Fund

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Billionaire Mukesh Ambani has found yet another high-profile firm to write a massive check to his telecom venture Reliance Jio Platforms at the height of a global pandemic.

Saudi Arabia’s Public Investment Fund, one of the largest and most impactful sovereign wealth funds in the world, said on Thursday it will invest $1.5 billion in the top Indian telecom operator for a 2.32% stake in the company.

With this deal, Jio Platforms, which is India’s biggest telecom operator with 388 million subscribers, has secured 15.2 billion from ten investors including social giant Facebook in the past nine weeks by selling a 24.7% stake in its business.

For some context, India’s startup ecosystem raised $14.5 billion last year — in what was its best year.

Today’s announcement further illustrates the opportunities foreign investors see in Jio Platforms, a three-and-a-half-year-old subsidiary of Reliance Industries (India’s most valuable firm) that has upended the telecommunications market in India with cut-rate voice call and mobile data tariffs.

In a statement, Yasir Al-Rumayyan, Governor of PIF, said, “We are delighted to be investing in an innovative business which is at the forefront of the transformation of the technology sector in India. We believe that the potential of the Indian digital economy is very exciting and that Jio Platforms provides us with an excellent opportunity to gain access to that growth. This investment will also enable us to generate significant long-term commercial returns for the benefit of Saudi Arabia’s economy and our country’s citizens, in line with our mandate to safeguard and grow the national wealth of the Kingdom.”

Jio Platforms also owns a bevy of digital apps and services including music streaming service JioSaavn (which it says it will take public), on-demand live television service JioTV and payments app JioMoney, as well as smartphones, and broadband business. These services are available to Jio subscribers at no additional charge.

Pankaj Jain, a high-profile angel investor, told TechCrunch that Jio Platforms’ digital services suite appeared to have helped it attract foreign investors. “Foreign investors see that owning the pipes is a race to the bottom in terms of ARPU (average revenue per user) but having so many bundled services seems like it’s the future for telecommunications companies. By solidifying their content strategy, they have appealed to investors that are seeing this same strategy play out in other markets,” he said.

“Unfortunately, it’s still to be seen whether content can help increase margins significantly in India.”

Though Reliance Jio Platforms has not revealed why it is raising so much money, this capital could be deployed to cut oil-to-retails giant Reliance Industries’ net debt of about $21 billion, said Mahesh Uppal, director of communications consultancy firm Com First, in a conversation with TechCrunch.

Ambani pledged to clear Reliance’s due by early 2021. Reliance Industries had no debt in 2012, but that changed when the company decided to enter the telecommunications market.

“From Oil Economy, this relationship is now moving to strengthen India’s New Oil (Data-driven) Economy, as is evident from PIF’s investment into Jio Platforms. I have greatly admired the defining role PIF has played in driving the economic transformation of the Kingdom of Saudi Arabia,” said Ambani, India’s richest man, in a statement today.

More to follow…