Silver Lake to invest $750m in Reliance's India app platform

Reliance Industries, the parent group, announced the deal and said the transaction values the unit at $65 billion, according to a regulatory statement. The development comes less than two weeks after the Indian oil-to-retail conglomerate previously announced Facebook's acquisition of a 9.9% stake in Jio Platforms. The size of Silver Lake's stake has not been disclosed.  

Founded last year, Jio Platforms is the parent unit of Reliance Jio Infocomm, a Reliance Industries subsidiary that owns India's largest telecom player by number of subscribers. Over the years, the telecom unit has created an app ecosystem by launching a series of Jio-branded apps seeking to target its 388-million strong subscriber base.

Only JioSaavn, India’s leading music-streaming app, is an industry leader, however, among the list of Jio apps. Reliance Jio merged Saavn, backed by PE investors such as Tiger Global Management, with its own music streaming app in 2018.  

Speaking on Facebook's most recent earnings call, CEO Mark Zuckerberg noted that the social media giant's investment is expected to lead to closer integration between Facebook-owned WhatsApp, India's leading messaging service, and the Jio app ecosystem. Specifically, WhatsApp could help small businesses offer Indian consumers a chat-based ordering option. JioMart, an e-commerce platform launched at the start of the year, would be a natural partner. 

"I want to be careful not to put words in their mouth, but just from what they've basically described both to us and publicly, about their Jio Mart vision, is there are millions of small businesses and shops across India, and they want to try to help get them onto a single network that you'll be able to communicate with through WhatsApp and do payments online through WhatsApp," Zuckerberg said.

He also suggested that the partnership could lead to similar roll-outs in other markets.

Silver Lake, which has over $43 billion in assets under management and committed capital, invests in technology businesses globally. Asia activity has primarily focused on China, where current portfolio companies include Alibaba Group and its financial services affiliate Ant Financial, ride-hailing platform Didi Chuxing, and artificial intelligence specialist SenseTime. Most recently, Silver Lake bought Australian ticketing player TEG from Affinity Equity Partners.

India-based VCs have expressed measured skepticism of Reliance's vision but have conceded the plan has potential. Analysts note the conglomerate has significant government backing. However, WhatsApp has yet to obtain a license that would allow users of the service to carry out digital payments within the messaging app but it has carried out pilot projects in the country. 

Separately, Reliance Industries owed $21.4 billion in net debt as of March. Last week, it announced plans for a $7 billion share sale. The conglomerate has previously declared an ambition to eliminate net debt by the end of the current financial year. Profit for the quarter ended March fell by nearly two-fifths due to a fall in oil prices and weak demand caused by the COVID-19 pandemic.

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• Topics
• South Asia
• Expansion
• Technology
• India
• Silver Lake
• Reliance Strategic Business Ventures Limited
• TMT