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Reliance further dilutes Jio Platforms’ equity as KKR invests USD 1.5 billion

Reliance Industries’ mad run to raise funds continues. Jio Platforms total funding crossed USD 10 billion.

Reliance Industries, India’s largest company by market cap, in a regulatory filing on Friday said it plans to sell a 2.32% equity stake in its subsidiary Jio Platforms to the New York-headquartered private equity firm KKR for USD 1.5 billion.

This round of funding follows the announcement of four successive rounds within a month. High profile firms including social networking giant Facebook, Silver Lake, Vista Equity Partners, and General Atlantic picked up stakes in the company owned by Mukesh Ambani, Asia’s richest person.

With the recent investment, Reliance has raised USD 10.37 billion (INR 78,562 crore) by selling 17.12% stake in Jio Platforms.

Earlier this week, Reliance said it would raise USD 870 million from American PE giant General Atlantic by selling a 1.34% equity stake in its digital arm. In May, PE firms Silver Lake and Vista Equity Partners invested USD 746.7 million and USD 1.5 billion, respectively in Jio Platforms. Silver Lake now owns an estimated 1.15% stake in Jio Platforms, while Vista Equity holds 2.32%.

However, of all the tech investors Reliance has on-boarded, none is more beneficial than Facebook with which it has inked a USD 5.7 billion investment deal for a 9.9% stake in Jio Platforms. According to the agreement, Reliance’s ambitious e-commerce venture JioMart would be able to sell its products directly through Facebook’s messaging platform WhatsApp.

Jio Platforms is an umbrella entity under which Reliance has created an ecosystem comprising of its telecom network, devices, apps, content, platforms, and services. The four-year-old Reliance Jio, the telecom arm of the oil-to-retail conglomerate, is a wholly-owned subsidiary of Jio Platforms. Reliance has reportedly infused over USD 30 billion to build Jio Platforms.

Relying on this venture, Reliance has been able to sell its vision of creating a digital India to 1.3 billion Indians, primarily focusing on millions of small merchants, micro-businesses, and farmers. By roping in four giant tech investors for Jio Platforms, Ambani has taken one more step toward his aim of eliminating Reliance’s USD 21.4 billion net debt by the end of this year.

The latest transaction values Jio Platforms at an equity value of USD 65 billion and an enterprise value of USD 68 billion, the same valuation that was considered for the deal with General Atlantic and Vista Equity Partners.

This is KKR’s largest investment in Asia, which has backed some high profile companies including China’s ByteDance and Indonesia’s Go-Jek. In India, where KKR has been present for over 13 years, it has put in money in Bharti Infratel, Avendus Capital, Max Financial Services, and EuroKid, among others. Since its inception in 1976, the firm has invested over USD 30 billion in tech companies. Currently, the firm’s technology portfolio has more than 20 companies across the technology, media, and telecom sectors.

Mukesh Ambani, chairman and managing director of Reliance Industries, said, “KKR shares our ambitious goal of building a premier digital society in India. KKR has a proven track record of being a valuable partner to industry-leading franchises and has been committed to India for many years.”

Henry Kravis, co-founder and co-CEO of KKR, believes that “very few companies have the potential to transform a country’s digital ecosystem in the way that Jio Platforms is doing in India, and potentially worldwide.”

“We are investing behind Jio Platforms’ impressive momentum, world-class innovation, and strong leadership team, and we view this landmark investment as a strong indicator of KKR’s commitment to supporting leading technology companies in India and Asia Pacific.”