In a development which will not only help Reliance Industries cut its debt but also enable it to emerge as a major player in the e-commerce and larger digital space, US tech major, Facebook on Wednesday announced an investment of $5.7 billion (Rs 43,574 crore) to buy a 9.99% stake in Jio Platforms. Jio Platforms is 100% subsidiary of RIL, created in October last year which houses all its digital ventures chief of which is Reliance Jio Infocomm, which runs mobile services. This is Facebook’s biggest stake buy since its 2014 acquisition of WhatsApp for about $19 billion.

To begin with the two firms will collaborate on the e-commerce front to digitise the country’s over 60 million, small and medium businesses, and 30 million neighbourhood kirana stores. The basic idea is that Jio’s e-commerce app Jio Mart will get integrated with FB’s messenger platform, WhatsApp to bring on-board the neighbourhood kirana stores on a digital platform. Though customers can order on the platform and choose to pay via other payment apps, over time it is expected that when WhatsApp payments business gets operationalised it will get a huge leg-up. Even Jio Money will be a beneficiary.

The collaboration, which is not exclusive and both the partners are free to forge alliances with other suitable players, nonetheless will offer big competition to current e-commerce players like Amazon, Flipkart, Big Basket and Grofers, etc apart from payment firms like PhonePe etc.

WhatsApp with its 400 million subscribers, its parent Facebook’s 250 million users in the country, and Jio’s 388 million users provide a perfect start to the platform. The benefit for the kirana stores is that they get digitised without having to spend anything and can extend their reach and effectively compete with the bigger, organised e-commerce players. However, a big challenge for them would be logistics like delivery for which they need to hire manpower as well offer services which matches in quality with bigger, organised players.

“Today we are announcing a $5.7 billion, or Rs 43,574 crore, investment in Jio Platforms, part of Reliance Industries, making Facebook its largest minority shareholder,” the company said in a statement. RIL in a separate statement said the investment by Facebook values Jio Platforms at Rs 4.62 lakh crore pre-money enterprise value ($65.95 billion). Facebook will be issued fresh equity shares and will get a board position on Jio Platforms.

Jio Platforms will retain Rs 15,000 crore and use the remaining amount to pare some of its about Rs 40,000 crore debt. RIL spent almost $50 billion — mostly borrowed money — on Jio, whose entry in 2016 with free calls and cheap data bought about a paradigm shift in the manner Indian telecom industry functioned which led some rivals to exit or merge. At the end of December quarter, RIL had an outstanding debt of Rs 306,851 crore. It also had cash in hand of Rs 153,719 crore, bringing the net debt position to Rs 153,132 crore.

According to Credit Suisse, Facebook’s investment will accelerate Jio’s digital monetisation drive wherein RIL transferred Rs 1.08 lakh crore of debt from Jio to Jio Platforms. Jefferies said that the transaction suggests that Facebook expects Jio’s Ebitda to double from current levels. The transaction, it said, sets benchmark valuation for any future listing for Jio.

The investment valued Jio Platforms among the top five listed companies in India by market capitalisation, within just three and half years of launching commercial services.

RIL has been seeking strategic partnerships across its businesses while targeting to deleverage its balance sheet. It has been talking to Saudi Aramco for sale of a 20% stake in its oil-to-chemical business for an asking of $15 billion. RIL has sold a stake in its retail fuel venture to BP Plc for Rs 7,000 crore.