Alphabet Inc.’s Google will invest $4.5 billion in Reliance Industries Ltd’s digital unit, joining a list of global backers, including Facebook, seeking to exploit India’s vast and fast-growing market of internet users.
The deal will give Google a 7.73% stake in RIL’s Jio Platforms at a valuation of ₹4.43 trillion, marking the US technology giant’s biggest-ever investment in an Indian company. The transaction is subject to regulatory and other approvals.
With this, Jio Platforms has raised a total of ₹1.52 trillion by selling nearly 33% stake to 13 financial and strategic investors in just 11 weeks. This has helped billionaire Mukesh Ambani-controlled RIL erase its net debt much ahead of the March 2021 target.
Google and Jio Platforms will also collaborate to develop “an entry-level affordable smartphone with optimizations to the Android operating system and the Play Store", the two companies said in a joint statement on Wednesday.
“Jio Platforms will pursue this global opportunity and create a significant source of revenue from both the domestic and global markets," said RIL in a statement.
The partnership with Google was announced by RIL chairman Ambani during the company’s annual meeting.
Jio Platforms, with more than 388 million users, houses the digital assets of RIL, including broadband connectivity, cloud and edge computing, big data analytics and artificial intelligence.
The Google-Jio deal will seek to leverage Jio and Google’s existing digital services to capture the emerging digitization market beyond the current 500 million Internet users in India.
“RIL and Jio Platforms, in particular, deserve a good deal of credit for India’s digital transformation. The pace and scale of digital transformation in India are hugely inspiring for us and reinforces our view that building products for India first helps us build better products for users everywhere," Sundar Pichai, chief executive officer of Google and Alphabet (Google’s parent), said. “I am excited that our joint collaboration will focus on increasing access for hundreds of millions of Indians who don’t currently own a smartphone while improving the mobile experience for all."
The stake sales by RIL have positioned India as a hot-spot for M&A deals this year, accounting for more than 15% of those announced in the Asia-Pacific—the highest since at least 1998.
Google, Facebook and Amazon.com Inc. are pumping billions of dollars into India to lay the foundation for future growth in one of the world’s last major relatively untapped internet markets.
Google’s investment in Jio will come from its new $10 billion India digitization fund. Facebook invested $5.7 billion in Jio Platforms in April while Microsoft’s venture fund M12 said last month it would open an office in India to pursue investment opportunities. Amazon is investing an additional $1 billion in India.
“In the next three years, I can see a strong path for Jio to connect over a 0.5 billion mobile customers; over 1 billion smart sensors; and over 50 million homes and business establishments," said Ambani.