General Atlantic has agreed a deal for an $870m stake in Mukesh Ambani’s Jio Platforms, extending an eye-catching run of investments by top US investors into the young Indian digital company at the height of the global coronavirus pandemic.
The New York-based private equity firm will take a 1.3 per cent stake in four-year-old Jio, part of Mr Ambani’s sprawling Reliance Industries conglomerate, valuing the entity at $65bn.
General Atlantic becomes Jio’s fourth American investor in as many weeks. The deal is also General Atlantic’s largest in Asia to date.
Earlier this month, fellow US private equity firms Vista Equity Partners and Silver Lake announced their own investments into Jio, at $1.5bn and $750m respectively, with an April deal by Facebook for a bumper $5.7bn stake priming the way for a string of investments.
Even as the once-in-a-century pandemic upends global businesses and hits Reliance’s own finances, India’s richest man Mr Ambani has accelerated plans to transform Jio into a homegrown tech giant by bringing on global investors and cutting debt.
Reliance, whose core businesses are in oil refining and petrochemicals, launched the telecom operator in 2016 using cheap 4G data plans and incentives to gain market share. It now has 388m subscribers and online services like broadband and ecommerce.
Jio, which plans to list within five years, offers global investors an enticing route into the fast-growing Indian market where hundreds of millions are consuming online for the first time.
“We have stayed away from a lot of the consumer tech deals that were done over the last four or five years in India, primarily because the customer acquisition costs for those companies have been very high,” said Sandeep Naik, head of India and south-east Asia for General Atlantic.
“Many of [those] companies in India could only scale to the 30m-40m customers who could afford the services they were offering. But with 388m subscribers already, Jio is perfectly positioned to achieve that scale and go after the belly of the market.”
The pandemic and a collapse in demand for oil and refined products have increased pressure on Mr Ambani to reduce the debt burden his conglomerate took on to nurture Jio. Reliance has vowed to cut its net debt of $20bn down to zero in a year.
A proposed deal for Saudi Aramco to take a 20 per cent stake in its oil and chemicals business has not closed, with the dramatic drop in oil prices straining both Reliance’s energy units and the Saudi state energy giant.
Jio continues to court yet more investors. Saudi Arabia’s Public Investment Fund is in talks to invest about $1.5bn into the company, a person familiar with the discussions said. PIF declined to comment. Jio did not respond to a request for comment.
Mukesh’s son Akash Ambani, a director at Jio, said: “General Atlantic’s endorsement and partnership energises Jio’s young team to set, and achieve, even more ambitious goals in our onward march.”