American private equity firm TPG will invest $600 million in Jio Platforms, joining a roster of high-profile investors including Facebook and Silver Lake that have backed India’s top telecom operator at the height of a global pandemic.
TPG said it is acquiring a 0.93% stake in Jio Platforms, giving the Indian firm a valuation of $65 billion. TPG, which manages $79 billion of assets, is the eighth investor that has agreed to back Mukesh Ambani’s telecom network in just as many weeks.
Reliance Jio Platforms, which has amassed over 388 million subscribers, has secured $13.49 billion by selling nearly 22% stake in the company to Facebook, Silver Lake, KKR, Vista Equity Partners, General Atlantic, Mubadala, Abu Dhabi Investment Authority, and TPG.
TPG, which is also an investor in Uber, Spotify and Airbnb, said it is impressed by what the three-and-a-half-year-old subsidiary of India’s most valued firm (Reliance Industries) has achieved in the country. Mukesh Ambani, India’s richest man, shared a similar complement for TPG’s track record.
Jim Coulter, co-chief executive of TPG said, the company is “excited to play an early role in Jio’s journey as they continue to transform and advance India’s digital economy. Jio is a disruptive industry leader that is empowering small businesses and consumers across India by providing them with critical, high-quality digital services. The company is bringing unmatched potential and execution capabilities to the market, setting the tone for all technology companies to come.”
Saturday’s announcement further captures the growing appeal of Jio Platforms to foreign investors looking for a slice of the world’s second-largest internet market. Jio, which launched its commercial operations in the second half of 2016, upended the telecommunications market in India by offering mobile data and voice calls at cut-rate prices.
Pankaj Jain, a high-profile angel investor, told TechCrunch that Jio Platforms’ digital services suite has helped it attract foreign investors. Jio Platforms owns a bevy of digital apps and services including music streaming service JioSaavn (which it says it will take public), on-demand live television service JioTV and payments app JioMoney, as well as smartphones, and broadband business.
“Foreign investors see that owning the pipes is a race to the bottom in terms of ARPU (average revenue per user) but having so many bundled services seems like it’s the future for telecommunications companies. By solidifying their content strategy, they have appealed to investors that are seeing this same strategy play out in other markets,” he said. “Unfortunately, it’s still to be seen whether content can help increase margins significantly in India.”
In the past year, Jio has also forayed into the video gaming category, unveiled a video call assistant to automate customer support, inked a deal with Microsoft to subsidize Office 365 and Azure for small businesses in India, and unveiled plans to bring new movies to people’s home on the same day of their theatrical release.
The new capital should help Ambani further solidify his commitment to investors when he pledged to cut Reliance’s net debt of about $21 billion to zero by early 2021, Mahesh Uppal, director of communications consultancy firm Com First, told TechCrunch. The firm had no debt in 2012, but things changed when it raced to build Jio.
More to follow…
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