After Facebook, PE firm Silver Lake invests in Reliance Jio

Days after striking a deal with global social networking major Facebook, oil-to-telecom conglomerate Reliance Industries (RIL) today announced an investment from Menlo Park, California headquartered private equity firm Silver Lake.   

Silver Lake will invest $747.3 million (Rs 5,655.75 crore) in Jio Platforms, RIL said in a statement today. 

The investment puts Jio Platforms’ equity value at Rs 4.90 lakh crore and an enterprise value of Rs 5.15 lakh crore. The Silver Lake deal is made at a valuation 12.5% higher compared to an equity valuation of Facebook’s investment in Reliance Jio Infocomm, the company said. 

“Silver Lake has an outstanding record of being a valuable partner for leading technology companies globally. Silver Lake is one of the most respected voices in technology and finance. We are excited to leverage insights from their global technology relationships for the Indian Digital Society’s transformation,” Mukesh Ambani, CMD of RIL said. 

Jio Platforms, a wholly-owned subsidiary of RIL, owns proprietary telecom technology 4G LTE and several apps such as JioSaavan, JioTV and JioPay. RIL owns and operates Reliance Jio Infocomm, the digital and telecommunications arm with a subscriber base of 388 million through Jio Platforms.

Morgan Stanley acted as financial advisor to RIL and Zia Mody-led AZB & Partners and New York-based Davis Polk & Wardwell acted as legal counsels.

“Jio Platforms has brought extraordinary engineering capabilities to bear on bringing the power of low-cost digital services to a mass consumer and small businesses population. The market potential they are addressing is enormous...,”  Egon Durban, Co-CEO and managing partner of Silver Lake said.

With $40 billion in assets under management and capital commitments, Silver Lake’s previous significant investment include travel-tech major Airbnb, Chinese technology conglomerate Alibaba and its fintech affiliate Ant Financial, Google parent Alphabet’s life science division Verily and autonomous driving unit Waymo, technology major Dell Technologies and microblogging platform Twitter. 

Mark Zuckerberg-led Facebook recently put in $5.7 billion for a 9.99% stake in Jio Platforms making it the largest minority shareholder in Jio Platforms. The deal was touted as the largest foreign direct investment in the technology sector in India. Shortly after the deal, Reliance Jio launched its ecommerce arm JioMart on WhatsApp.

RIL, which announced its earnings for the quarter ended March 31, has a gross debt of Rs 3.4 lakh crore ($44 billion), RIL said in a separate statement. On Friday, RIL posted a consolidated net profit of Rs 6,348 crore, down 38.7% compared to the previous year due to fall in demand in its mainstay crude oil refining business. Its revenue declined to Rs 1.4 lakh crore, which fell by 2.4% on year. The company is said to be in talks with Saudi Aramco and Brookfield for sale of assets in petroleum and telecom verticals.