5.7 billion dollars investment in Reliance Jio by Social Media giant Facebook

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5.7 billion dollars investment in Reliance Jio by Social Media giant Facebook

Facebook invests in Jio

Wednesday, 22nd April 2020

US tech giant and social media leader Facebook buys almost 10 per cent stake in Reliance Jio for $5.7 billion or Rs 43,574 crore, causing the Reliance Industries Limited shares jump 8 per cent. The deal makes Facebook its largest minority shareholder.


Although the formal announcements have been made now, with Jio sending word out through a media note and Facebook mentioning it on its official blog post, speculations have been circulating for a while now. A leading business newspaper in the UK has talked about Facebook’s plans to make a large investment in Jio, days before the announcement.


As per official statement by Reliance, the main goal behind the deal is to spring new opportunities especially for small businesses across the country focusing mainly on micro, small and medium businesses, farmers, small and medium enterprises and small merchants.


Facebook’s motivation for the investment seems to be Jio’s ecommerce market platform JioMart, its huge user base and to divert the same to its messaging app Whatsapp. The messaging service has its biggest market in India, nearly 400 million users. Partnering with a local company will give it a stronghold and also much needed help it might require in navigating regulatory issues.


Chairman and managing director of Reliance India, Mukesh Ambani said the business partnership will make a huge contribution in India’s economic resurgence and help towards their “Digital India” initiative.


Facebook CEO and founder Mark Zuckerburg, in his talk about the deal, stated that in the wake of the Covid-19 lockdown many entrepreneurs are looking for reliable platforms and means to grow businesses and communicate with customers. This partnership with Jio will help the cause and open doors for businesses in India.


In a separate statement by Jio, it was also mentioned that the deal gives Zuckerburg the hope to get a strong foothold in India, on the phones used by Indians.


The deal comes at an opportune time for Reliance as its debts peaked to almost $40 billion by the end of the third quarter last year. The partnership will give it a breather and much needed funds to recover. Working towards their target of having a debt-free status by next year, the company is also in talks to sell one-fifths of its oil-to-chemical business and a part of its telecom tower assets to Saudi Aramco and Brookfield Asset Management, Canada respectively.


The deal offers a win-win for both parties. Facebook can hope to get deeper access into the second largest internet market of the world after China.


Source: NDTV

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