After Facebook, Reliance Industries in talks with other investors for similar-size stake sale

By: |
Published: April 30, 2020 7:55 PM

Billionaire Mukesh Ambani is looking to replicate the success of WeChat and Alipay in China as multipurpose super-apps -- platforms with integrated chat functions, payment and financial services and online shopping -- to take on Amazon and Walmart's Flipkart.

Earlier this week, JioMart, an e-commerce venture of Reliance Retail, opened a business account on Facebook’s WhatsApp.

Days after selling a stake in its digital arm to Facebook for USD 5.7 billion, Reliance Industries on Thursday said it is in talks with other strategic and financial investors for a similar-sized deal that will help cut debt at the unit that houses India’s youngest but biggest mobile operator. Without revealing the identity of the companies, RIL in its fourth-quarter earnings statement said the investment would be announced in the coming months.

“In addition to the FB investment, the board was informed that RIL has received strong interest from other strategic and financial investors and is in good shape to announce a similar-sized investment in the coming months,” it said.
Ahead of last week’s announcement of Facebook buying a 9.99 per cent stake in Jio Platforms Ltd, there were unconfirmed reports of the company being in parallel discussions with Google.

The potential interest, the company said, establishes “the attractiveness of Jio Platforms to the world and is a strong validation of RIL’s capability to conceive large-scale disruptive greenfield businesses”. “With strong visibility to these equity infusions, the board was informed that RIL is set to achieve net-zero debt status ahead of its own aggressive timeline,” the statement said.

Billionaire Mukesh Ambani is looking to replicate the success of WeChat and Alipay in China as multipurpose super-apps — platforms with integrated chat functions, payment and financial services and online shopping — to take on Amazon and Walmart’s Flipkart in an e-commerce market that KPMG says is likely to grow to USD 200 billion by 2027.

The tie-up brings together WhatsApp, India’s most popular app with about 400 million users, and Jio’s mobile services with 388 million subscribers.

WhatsApp would be integrating a ‘Jio Shopping bot’ on the API (application programming interface), and allow users to add the bot to their contacts. Once added, users can search for a local business, see available products in a catalogue, and purchase the product in the thread or in the shop.

Earlier this week, JioMart, an e-commerce venture of Reliance Retail, opened a business account on Facebook’s WhatsApp. It connects WhatsApp users to JioMart through automated text messaging and complete order delivery through local grocery or Kirana stores.

Although the service is only available in three cities, the experiment offers an example of how the WhatsApp-JioMart combination will function as a multipurpose mobile service connecting hundreds of millions of consumers with local Kirana stores.

The Facebook deal as also the one indicated by the company on Thursday along with a potential sale of 20 per cent stake in Reliance’s oil-to-chemical business to Saudi Aramco for an asking of USD 15 billion would help Ambani bring down overall net debt at his group and help to move towards his target of achieving zero net debt by March 2021.

The acquisition of a 9.99 per cent stake in Jio Platforms Ltd for USD 5.7 billion represents the second-largest investment of Facebook to date (the largest was USD 19 billion WhatsApp acquisition in February 2014).

The largest foreign direct investment in the technology sector in India is also expected to give the US social-networking firm a broader foothold in its biggest global market. Facebook will be issued fresh equity shares and will get a board position on Jio Platforms.

Ambani had, in August last year, told Reliance Industries shareholders about plans to sell stake in some of the businesses with the goal of making the firm free of net debt by 2021. “In the very near future, JioMart and WhatsApp will empower nearly 3 crore small Indian Kirana shops to digitally transact with every customer in their neighbourhood,” Ambani, 63, had said in a video message after the mega-deal announcement on April 22.

“This means all of you can order and get faster delivery of day-to-day items, from nearby local shops. At the same time, small kiranas can grow their businesses and create new employment opportunities using digital technologies,” he had said.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1From memoji to avatar, putting a digital version of yourself on the internet is now possible with various apps 
2Piyush Goyal bats for film industry workers, asks industry players to provide social security, wages
3Covid effect: Air India withdraws job offers for around 180 trainee cabin crew members