Facebook buys 9.9% stake in Reliance Jio for $5.7 billion
Facebook has bought a 9.9% stake in Reliance Jio, a unit of Reliance Industries for $5.7 billion on Wednesday. This boosted the Indian oil-to-retail conglomerate's share over 8% in early trade. Reliance Industries is the largest FDI in the technology sector in India.
The Jio-Facebook deal will help Reliance Industries to reduce the debt burden while on the other hand, it will help Facebook to get a stronger foothold in the market.
After the deal, Reliance Industries Limited released a statement stating that RIL, Jio and Facebook announce the signing of binding agreements for an investment of Rs 43,574 (5.7 billion USD) by Facebook in Jio Platforms. Facebook’s investment will translate into a 9.99% equity stake in Jio Platforms on a fully diluted basis.
While Mark Zuckerberg stated that with the communities around the world in lockdown, entrepreneurs need digital tools they can rely on to find and communicate with customers and grow their businesses. Small businesses are the core of every economy and they need our support. India has more than 60 million small businesses and millions of people rely on them for jobs.
Zuckerberg further stated, 'This investment underscores our commitment to India and our excitement for the dramatic transformation that Jio has spurred in the country. '
The Facebook-Jio deal will support Jio Mart (Digital commerce platform of Jio) where WhatsApp will empower approximately 33 crore Indian Kirana shops. With Jio Mart people will be able to order and get faster delivery of day-to-day essential items from locals shops near them. This, in turn, will help small Kirana shops to grow their business.
Also, the Facebook-owned WhatsApp chat service is planning to launch a payment service. The deal will also help Facebook in battling with the Chinese apps that have a stronghold in India. Mukesh Ambani owned Jio has 340 million subscribers and is India's largest telecom company while Mark Zukerberg owned WhatsApp has over 400 million users in India.