Mubadala Investment Company is investing $1.2 billion (Dh4.4bn) in Reliance Industries’ Jio Platforms to buy a 1.85 per cent stake as it continues to diversify its global investment portfolio.
Mubadala is the latest international investor after social media network Facebook and KKR, one of the world’s biggest private equity companies, to invest in the digital and wireless business in India, Asia’s third-largest economy.
Its investment brings the amount raised by Jio Platforms in just six weeks to $11.6bn and values the company at $65bn.
“We are committed to investing in, and actively working with, high-growth companies which are pioneering technology to address critical challenges and unlock new opportunities,” Khaldoon Al Mubarak, Mubadala’s managing director and group chief executive, said.
“We have seen how Jio has already transformed communications and connectivity in India, and as an investor and partner, we are committed to supporting India’s digital growth journey.
“With Jio’s network of investors and partners, we believe that the platform company will further the development of the digital economy.”
Reliance Industries, which has interests in oil and telecoms and is controlled by Asia’s richest man Mukesh Ambani, has so far sold slightly more than 18 per cent of Mumbai-based Jio Platforms in six fundraising deals.
Facebook’s $5.7bn deal in April for a 10 per cent stake makes it the biggest minority shareholder in the company. The purchase was Facebook's biggest since the 2014 acquisition of WhatsApp.
KKR announced a $1.5bn investment in the company for a 2.32 per cent stake – the private equity company’s biggest deal in Asia – in May. General Atlantic, the US investment company with stakes in Airbnb and Uber, took a 1.3 per cent share in an $870 million deal in the same month.
Silver Lake, the Silicon Valley private equity company, took a stake of about 1.15 per cent in a $750m deal, while Vista Equity Partners invested $1.5bn in exchange for a 2.32 per cent shareholding.
The deals highlight the potential of Jio Platforms – which houses Jio Infocomm, a movie streaming, music apps and telecoms venture – to become the dominant player in India’s digital economy. It already has 388 million subscribers.
“I am delighted that Mubadala, one of the most astute and transformational global growth investors, has decided to partner [with] us in our journey to propel India’s digital growth towards becoming a leading digital nation in the world,” Mr Ambani said.
“Through my longstanding ties with Abu Dhabi, I’ve personally seen the impact of Mubadala’s work in diversifying and globally connecting the UAE’s knowledge-based economy. We look forward to benefiting from Mubadala’s experience and insights from supporting growth journeys across the world.”
The shares of Reliance Industries rose as much as 2.42 per cent to hit a record 1,618 rupees (Dh78.8) on Friday after the announcement of the deal.
The transaction is subject to regulatory and other customary approvals.
Morgan Stanley acted as financial adviser to Reliance Industries while AZB & Partners and Davis Polk & Wardwell acted as legal counsel.
Jio has already pushed several telecoms rivals out of business through a price war. The company can count on Reliance’s huge retail network across the country to expand into India’s e-commerce sector.
The fundraising through Jio Platforms comes at a time Mr Ambani is seeking to honour a pledge to investors to bring the group’s net debt to zero.
The Indian company spent almost $50bn – mostly borrowings – to build Jio Infocomm, leading to a net debt of more than $20bn as of March 2019.
Reliance is working with banks on early preparations for a listing of Mumbai-based Jio Platforms outside of India and the initial public offering may happen in the next 12 to 24 months, according to Bloomberg.
Mubadala, which invests on behalf of the Abu Dhabi government, manages more than Dh880bn in assets. Its international portfolio include stake in General Electric, private equity company Carlyle Group, Austria’s oil and gas entity OMV and petrochemicals manufacturers Borealis and Nova Chemicals.
The company has in recent years pivoted to investment in technology sector and is also looking to invest in health life sciences and medical technology sector, Mr Al Mubarak said in February.
In March, Mubadala joined a consortium that is investing $2.25bn in Waymo, the self-driving technology company owned by Google’s parent Alphabet.
Other investors in the consortium include Silver Lake, the Canada Pension Plan Investment Board, automotive supplier Magna International and venture capital company Andreessen Horowitz.
Since 2008, Mubadala has been an active investor in advanced technology, and has a global presence with offices in Abu Dhabi, London, New York and San Francisco, partnering with leading technology funds to boost growth.