Jio-Facebook Deal: Facebook to Buy 9.99 Percent Stake in Reliance Jio

Facebook will buy a 10 percent stake in the Electronic Industry of India’s Reliance Industries for Rs. 43,574 crores, as the social media Company looks to leverage its highly popular WhatsApp chat service to Provide digital payment services.

The deal will allow the Indian conglomerate to cut debt which has piled up in its expensive push to secure top spot because of its Jio Infocomm telecom enterprise. Facebook’s investment will make it the most significant minority shareholder in Jio Platforms Ltd, Jio stated in an announcement on Wednesday, placing the enterprise value of the business at about $66 billion (roughly Rs. 5 lakh crores). Jio Platforms holds a host of Reliance’s digital assets including Jio Infocomm.
The approval to extend past the beta launch hasn’t come yet, a Facebook spokesman stated.

The messaging service has 40 crore consumers in India, its biggest market, reaching almost 80 percent of smartphone users from the nation. The deal will also aid the social media giant leverage WhatsApp to partner with Reliance’s e-commerce marketplace JioMart, that links small businesses to clients.

“(India) is in the center of a major digital transformation and associations like Jio have played a very big part in getting hundreds of millions of Indian people and small companies online,” Facebook founder CEO Mark Zuckerberg said in a post.

For Reliance, whose debt stack swelled to more than $40 billion (roughly Rs. 3 lakh crores) as of September, the partnership will bring in much-needed funds to make good on its promise to reduce net debt to zero by March 2021.

Reliance Industries, controlled by billionaire Mukesh Ambani, is also set to market a fifth of its petroleum and chemical refining company to Saudi Aramco for roughly $15 billion (approximately Rs. 1.15 lakh crores), and a stake in its own telecom tower resources to Canadian private equity company Brookfield Asset Management for more than $3 billon (approximately Rs. 23,000 crores).

While Jio is now the country’s biggest wireless operator within about three decades of its launching, Mumbai-headquartered Reliance has also rapidly expanded its retail industry, which now has over 10,000 shops selling groceries, consumer electronics, and apparel.

Revenue at these two businesses together jumped over 25 percent in the December quarter.

Last month, Financial Times reported that Facebook had been in discussions for a 10 percent stake in Jio however, the discussions were stopped as a result of international travel merger involving the coronavirus epidemic.

Jio said Morgan Stanley was the financial adviser on the offer. AZB & Partners, and Davis Polk & Wardwell were counsels.

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