American private equity firm TPG said on Saturday it will invest $600 million in Jio Platforms, joining a roster of high-profile investors including Facebook and Silver Lake that have backed India's top telecom operator at the height of a global pandemic.
TPG said it is acquiring a 0.93% stake in Jio Platforms, giving the Indian firm a valuation of $65 billion. TPG, which manages $79 billion of assets, is the eighth investor that has agreed to back Mukesh Ambani's telecom network in just as many weeks.
Reliance Jio Platforms, which has amassed over 388 million subscribers, has secured $13.49 billion by selling nearly a 22% stake in the company to Facebook, Silver Lake, KKR, Vista Equity Partners, General Atlantic, Mubadala, Abu Dhabi Investment Authority and TPG. For some context, the whole of the Indian startup ecosystem raised $14.5 billion last year.
TPG, which is also an investor in Uber, Spotify and Airbnb, said it was impressed by what the three-and-a-half-year-old subsidiary of India's most valued firm (Reliance Industries) has achieved in the country. Mukesh Ambani, India's richest man, shared a similar complement for TPG's track record.
Jim Coulter, co-chief executive of TPG said, the company was "excited to play an early role in Jio's journey as they continue to transform and advance India's digital economy. Jio is a disruptive industry leader that is empowering small businesses and consumers across India by providing them with critical, high-quality digital services. The company is bringing unmatched potential and execution capabilities to the market, setting the tone for all technology companies to come.”
Saturday's announcement further captures the growing appeal of Jio Platforms to foreign investors that are looking for a slice of the world’s second-largest internet market. Jio, which launched its commercial operations in the second half of 2016, upended the telecommunications market in India by offering mobile data and voice calls at cut-rate prices.
Pankaj Jain, a high-profile angel investor, told TechCrunch that Jio Platforms' digital services suite has helped it attract foreign investors. Jio Platforms owns a bevy of digital apps and services, including music streaming service JioSaavn (which it says it will take public), on-demand live television service JioTV and payments app JioMoney, as well as smartphones and broadband business. These services are available to Jio subscribers at no additional charge.
"Foreign investors see that owning the pipes is a race to the bottom in terms of ARPU (average revenue per user), but having so many bundled services seems like it's the future for telecommunications companies. By solidifying their content strategy, they have appealed to investors that are seeing this same strategy play out in other markets," he said. "Unfortunately, it's still to be seen whether content can help increase margins significantly in India."
In the past year, Jio has also forayed into the video gaming category, unveiled a video call assistant to automate customer support, inked a deal with Microsoft to subsidize Office 365 and Azure for small businesses in India and unveiled plans to bring new movies to people’s home on the same day of their theatrical release.
Though Reliance Jio Platforms has not shared why it is raising money, the capital could be deployed to cut oil-to-retails giant Reliance Industries' net debt of about $21 billion, said Mahesh Uppal, director of communications consultancy firm Com First. Ambani pledged to clear Reliance's due by early 2021. Reliance Industries had no debt in 2012, but that changed when the company decided to enter the telecommunications market.
"I am happy to welcome TPG as valued investors in our continued efforts towards digitally empowering the lives of Indians through the creation of a digital ecosystem," said Ambani in a statement.
Update: Jio Platforms has secured another investment: This time L Catterton, which is pouring $250 million for a 0.39% stake in the company.