Silver Lake to invest $747M in India’s Jio Platforms

Weeks after Facebook invested $5.7 billion in Jio Platforms, India’s top telecom operator, private equity firm Silver Lake is following suit — and is willing to pay a premium for it.

Silver Lake announced on Monday it will be investing 56.56 billion Indian rupees (about $746.8 million) in Jio Platforms for about 1.15% stake in the Indian telecom network, giving it a valuation of $65 billion, a 12.5% premium* to the value implied by the Facebook investment.

The Menlo Park-headquartered PE firm, which has approximately $40 billion in combined assets and committed capital, has invested in dozens of tech firms over the years including in video game engine maker Unity, audio and video communication service Skype, consultancy firm Gartner, Alibaba’s Ant Financial, computer giant Dell, and Chinese ride-hailing giant Didi Chuxing.

Silver Lake has made several investments this year. Last month it invested in Expedia and Airbnb. In March, it invested $1 billion in Twitter, and co-led a round in Waymo. This is the second investment Silver Lake is making in an Indian firm. In 2013, it invested in Bangalore-based commodity trading and risk management software startup Eka.

Reliance Jio Platforms, which began its commercial operation in the second half of 2016, upended the local telecom market by offering bulk of 4G data and voice calls for six months to users at no charge. A subsidiary of Reliance Industries (India’s most valuable firm by market value), Jio Platforms has amassed 388 million subscribers since its launch to become the nation’s top telecom operator.

Jio has “brought extraordinary engineering capabilities to bear on bringing the power of low-cost digital services to a mass consumer and small businesses population. The market potential they are addressing is enormous, and we are honored and pleased to have been invited to partner with Mukesh Ambani and the team at Reliance and Jio to help further the Jio mission,” said Egon Durban, co-chief executive and managing partner at Silver Lake, in a statement.

Jio Platforms, previously known as just Jio, also runs a suite of services including music streaming service JioSaavn (which has plans to become a public company), smartphones, broadband business, on-demand live television service JioTV, and payments service JioPay.

In a statement, Mukesh Ambani, who oversees Reliance Industries, said, “Silver Lake has an outstanding record of being a valuable partner for leading technology companies globally. Silver Lake is one of the most respected voices in technology and finance. We are excited to leverage insights from their global technology relationships for the Indian Digital Society’s transformation.”

In the company’s earnings call last week, Ambani said several firms had expressed interest in buying stakes in Jio Platforms, in which he has poured over $30 billion over the years, in wake of the deal with Facebook.

Facebook said that other than offering the capital to Jio Platforms for a 9.99% stake in the firm, it would work with the Indian giant on a number of areas starting with e-commerce.

Days later, JioMart, an e-commerce venture run by India’s most valued firm, began testing an “ordering system” on WhatsApp, the most popular smartphone app in India with over 400 million active users in the world’s second largest internet market.

The deals with Facebook and Silver Lake should help Ambani further cement his last year’s commitment to investors when he said he aimed to cut Reliance’s net debt of about $21 billion to zero by early 2021. Its core business, oil refining and petrochemicals, has been hard hit amid the coronavirus outbreak. Its net profit in the quarter that ended on March 31 fell by 37%.

*It’s unclear what class of shares Jio Platforms has agreed to sell to Silver Lake; if it’s the same as what Facebook has received, the urgency of the investment at a premium suggests Jio could be headed to an IPO, or engage in several more major investment offers in the coming weeks — or both.