Mukesh Ambani attracted the seventh-largest investor in his telecommunications business within a few weeks. On Sunday, Reliance Jio Platforms announced that it will sell 1.16% of its shares to the Abu Dhabi Investment Authority (ADIA) at a price of US $750 million and continue to make compelling investments at the peak of the global pandemic.
The petroleum retail giant Reliance Industries has been India’s most valuable company since it was established three and a half years ago and has now received nearly $13 billion in investment from seven investors including Facebook and US private equity firm Silver Lake. , General Atlantic by selling nearly 20% of the shares.
One of the world’s largest investors, ADIA, announced today that this is the third transaction owned by Reliance Jio Platforms, India’s largest telecommunications operator, which has more than 388 million users.
Jio Platforms said earlier this week that it will sell $1.2 billion in shares to Abu Dhabi-based sovereign company Mubadala. On Friday, the company also announced that US private equity firm Silver Lake will inject another $600 million to increase its stake in Jio to 2.1%.
This transaction further captures the appeal of Jio Platforms to foreign investors seeking a slice in the world’s second-largest Internet market. Jio started commercial operations in the second half of 2016, providing mobile data and voice calls at a low price, thus disrupting the market.
When new players appear in the market, the existing players in India (Airtel, Vodafone, Idea, BSNL) do the opposite of companies in other parts of the world. Existing participants hope that newcomers can actively compete on price.
They often lower prices-sometimes dramatically-to reduce the latter’s attractiveness. Newcomers often complain to regulators about the anti-competitive practices of incumbents. Said Mahesh Uppal, director of communications consulting firm Com First.
“In India, the situation is quite the opposite. It is the existing participants who are complaining to the regulator. Therefore, we have seen the miscalculation of some veteran players that they have missed the opportunity to take any major measures before the release of Jio.”
India has become one of the largest battlegrounds in Silicon Valley and the world, while Chinese companies hope to win the country’s 1.3 billion people, most of whom still do not have smartphones and internet connections.
In recent weeks there have been media reports that Amazon is considering buying Bharti Airtel, India’s third-largest telecommunications operator, with a value of at least $2 billion. Google has negotiated similar deals with Vodafone Idea, the second-largest telecommunications operator.
Hamad Shahwan Aldhaheri, who is responsible for ADIA private equity transactions, said that Jio Platforms is expected to benefit from major socio-economic development and the “transformative impact of technology on people’s lives and ways of working.”
“The rapid growth of this business is based on just four years of market leadership and a strong track record of strategic execution. Our investment in Jio further demonstrates ADIA’s ability to leverage deep regional and industry expertise on a global scale Invest domestically in market-leading companies and invest with mature partners.”
Uppal said the new capital will help Ambani, India’s richest man, further strengthen his commitment to investors, when he pledged to reduce Reliance’s net debt to approximately $21 billion to zero by early 2021. The company had no debt in 2012, but the situation changed when it bid for Jio.
Besides, the outbreak of coronavirus has hit the core business of Reliance Industries (refining and petrochemical products). As of the end of the quarter on March 31, its net profit fell by 37%.
“I am very pleased that ADIA has successfully made long-term value investments for more than forty years globally, and has partnered with Jio Platforms to focus on bringing India to a digital leadership position and creating inclusive growth opportunities. This investment is our strategy and Indian potential Strong support.” Ambani said.