After Facebook, Reliance in talks with other investors to offload more stake
Without revealing the identity of the companies, RIL in its fourth-quarter earnings statement said the investment would be announced in the coming months.
On April 22, the world’s largest social media company announced that it has invested $5.7 billion for a 9.99% stake in Reliance Jio Platforms, a three-and-a-half-year-old subsidiary of the nation’s most valued firm.
“In addition to the FB investment, the board was informed that RIL has received strong interest from other strategic and financial investors and is in good shape to announce a similar-sized investment in the coming months,” it said.
Ahead of last weeks announcement of Facebook buying stake in Jio Platforms Ltd, there were unconfirmed reports of the company being in parallel discussions with Google.
Billionaire Mukesh Ambani is looking to replicate the success of WeChat and Alipay in China as multipurpose super apps—platforms with integrated chat functions, payment and financial services and online shopping— to take on Amazon and Walmart’s Flipkart in an e-commerce market that KPMG says is likely to grow to USD 200 billion by 2027.
The tie-up brings together WhatsApp, India’s most popular app with about 400 million users, and Jio’s mobile services with 388 million subscribers.
WhatsApp would be integrating a Jio Shopping bot on the API (application programming interface), and allow users to add the bot to their contacts. Once added, users can search for a local business, see available products in a catalogue, and purchase the product in the thread or in the shop.
Earlier this week, JioMart, an e-commerce venture of Reliance Retail, opened a business account on Facebooks WhatsApp. It connects WhatsApp users to JioMart through automated text messaging and complete order delivery through local grocery or Kirana stores.
Although the service is only available in three cities, the experiment offers an example of how the WhatsApp-JioMart combination will function as a multipurpose mobile service connecting hundreds of millions of consumers with local Kirana stores.
The Facebook deal as also the one indicated by the company on Thursday along with a potential sale of 20 per cent stake in Reliance’s oil-to-chemical business to Saudi Aramco for an asking of USD 15 billion would help Ambani bring down overall net debt at his group and help to move towards his target of achieving zero net debt by March 2021.
The acquisition of a 9.99 per cent stake in Jio Platforms Ltd for USD 5.7 billion represents the second-largest investment of Facebook to date (the largest was USD 19 billion WhatsApp acquisition in February 2014).
The largest foreign direct investment in the technology sector in India is also expected to give the US social-networking firm a broader foothold in its biggest global market. Facebook will be issued fresh equity shares and will get a board position on Jio Platforms.
Ambani had, in August last year, told Reliance Industries shareholders about plans to sell stake in some of the businesses with the goal of making the firm free of net debt by 2021.
“In the very near future, JioMart and WhatsApp will empower nearly 3 crore small Indian Kirana shops to digitally transact with every customer in their neighbourhood,” Ambani, 63, had said in a video message after the mega-deal announcement on April 22.
“This means all of you can order and get faster delivery of day-to-day items, from nearby local shops. At the same time, small kiranas can grow their businesses and create new employment opportunities using digital technologies,” he had said.
Reliance Industries’ profit falls
Amid COVID-19 crisis, RIL’s net profit dropped 39 per cent to ₹6,348 crore in March quarter on the backdrop of slump in crude oil prices. The company had reported profit of Rs 10,362 crore in the same quarter last year.
RIL has also has imposed up to 50% pay cut for some top oil-and-gas division employees. The industries has decided that employees earning more than 1.5 million rupees annually will face a 10% salary cut, while the cuts will be 30-50% for senior executives.
(With inputs from agencies)