Abu Dhabi Investment Authority partners with Jio for 1.16% stake

Jio's eighth deal—worth Rs 5,683.5 crore—is its second with a sovereign wealth fund. With this deal, Jio Platforms has raised nearly Rs 1 lakh crore in seven weeks

Published: Jun 7, 2020 09:27:50 PM IST

Updated: Jun 7, 2020 09:58:03 PM IST

Seven weeks after it received an investment from Facebook, Jio Platforms has signed on Abu Dhabi Investment Authority (ADIA) as its newest partner. The deal marks the eighth investment—and the seventh investor—for the company after Facebook, Silver Lake, KKR, Vista Equity Partners General Atlantic and Mubadala Investment Company. Silver Lake, on Friday, invested a second round.

ADIA plans to invest Rs5,683.5 crore for a 1.16 percent stake in Jio Platforms at an equity value of Rs4,91,000 crore and an enterprise value of Rs516,000 crore. With this deal, Jio Platforms has raised a total of Rs97,885.65 crore from investors as it prepares to position itself as a platform company with a presence in telecom, retail and payments.

In previous announcements, Jio has indicated that retail, along with telecom, will power growth for Jio Platforms. Since then, it has accelerated the rollout of JioMart, which facilitates orders to local merchants. The service is now available in 200 cities. This would allow the business to grow a lot faster as it would remove the need to set up new stores across the country. With the Facebook partnership, the aim is to put out an ordering platform on Whatsapp and eventually integrate with it with a payments solution on he same app.

The money raised by Reliance Platforms has prompted renewed interest in Indian telcos Competitors Bharti Airtel and Vodafone Idea are said to be exploring deals to strengthen their balance sheets. Media reports have pointed to Google partnering with Vodafone Idea, and Bharti Airtel partnering with Amazon, as they compete with Jio on not just voice and data services but also value added services—cinema, music, online learning and lending, among others. Vodafone Idea and Bharti Airtel have denied the investment reports in exchange filings but have seen their stocks re-rated in the last month.

In the last quarter, both Reliance Jio and Bharti Airtel have benefited from rising average revenue per user as well as lower network investments. In the fourth quarter results announced, Jio had an average revenue per user (ARPU) of Rs130.6 and Airtel registered Rs154 per user. Tariff hikes announced in December 2019 are expected to keep ARPUs rising through FY21 as companies look to charge more for data as well as value added services. (Vodafone Idea is yet to announce results).

Jio’s deals have been done at an enterprise value of Rs5,16,000 crore, while Airtel is valued at an enterprise value of Rs4,61,000 crore and Vodafone Idea at Rs123,000 crore.

Over the last month, since the Facebook deal was announced, Reliance Industries has gained 30.2 percent to Rs1,580 a share, adding Rs129,000 crore to its present market capitalisation of Rs10,02,000 crore. This compares to a 9.5 percent gain in the Sensex during the same period. In the same period, Bharti Airtel has also gained 15.2 percent, taking its market cap to Rs3,19,000 crore.