• Tom Bradley

Jio: The Next Tech Giant?



Over the past few weeks Indian conglomerate Reliance Industries’ tech business Jio has raised $10bn in funding from 5 major US investors. The flurry of deals has seen Facebook and 4 US private equity firms make investments in the high potential Jio, with the private equity deals implying a $65bn valuation. This comes at a time where Jio are attempting to consolidate their dominant position in the Indian telecoms market and expand their tech service further into ecommerce and digital payments.


Since inheriting the Reliance Industries conglomerate in 2005 Chairman and managing director Mukesh Ambani has diversified the oil and petrochemicals business, with rapid expansion into the tech sector. Oil still remains crucial to Reliance, remaining responsible for the bulk of the revenue generated and it has also played an important role in funding Jio, with profits from oil a major contributor to the $50bn spent in developing Jio. With the decline in oil prices as a result of collapsing demand in the COVID-19 world Reliance has seen its oil business hit, Q1 profit was down 37% year on year, leading to widespread pay cuts across the division and Ambani agreeing to forgo his salary.

This has further encouraged Ambani to accelerate the realignment of Reliance as he seeks to build an Asian tech giant. Reliance are currently in the process of selling 20% of the oil refinery business to the world’s most profitable firm, Saudi Aramco. This deal will see further cash inflows that will be crucial if Ambani is to meet his target of zero net debt by March 2021. Currently Reliance is heavily indebted, seeing a substantial debt burden of $20bn which is largely due to the raising of debt used to build Jio. Alongside the series of deals Ambani has secured Reliance have announced India’s biggest rights issue worth $7bn, together these will make significant progress in moving towards the zero-debt target.


Reliance initially launched Jio as a telecoms operator in 2016 following the heavy funding from debt and oil profits. The company has quickly established itself as the market leader, with an estimated 388m users, drawn in by its cheap 4g contracts that existing firms could not compete with. Jio has since expanded into broadband, streaming and ecommerce, and are currently the only Indian firm able to compete with the big US tech groups. With the Indian market set for rapid expansion in the near future it is likely Jio will soon be able to rival Alibaba in the Asian tech space.

Mukesh Ambani, Source: PTI

Of the $10bn raised $4.3bn has come from four deals with major US private equity firms. Silicon Valley, tech-focused firm Silver Lake were the first to agree an investment with a $753m deal for a 1.15% stake in Jio on the 4th May. On announcing the deal Silver Lake CEO Egon Durban touted the “enormous” market potential and the “extraordinary engineering capabilities” that Jio has employed in developing its services. Software-focused Texas private equity firm Vista followed shortly after with a $1.5bn investment for a 2.3% stake announced on the 8th May. Next was New York firm General Atlantic, with their $873m investment worth 1.3% announced on the 17th May marking the firms largest Asian deal.


Most recently KKR agreed a similar deal to Vista, announcing a $1.5bn for 2.3% deal on May 22nd. The deals all give Jio a valuation of $65bn, representing the strong belief international backers have in the Indian firm. It is likely more investments will follow in the near future as Jio is excelling with soaring data traffic as a result of the nationwide lockdowns imposed in India. Jio currently dominates the 4g market holding a 65% market share, and with the backing of prominent US investors their position is only likely to strengthen. For the private equity investors Jio represents an opportunity to access the fast-growing Indian market and as Jio expands the deals are expected to offer lucrative returns.

The most notable deal for Jio is by far the Facebook investment, with the $5.7bn investment for a 9.99% share in April making the US tech giant Jio’s largest minority shareholder. The deal is also a flagship one for Facebook, it is their second largest investment ever (only behind the WhatsApp acquisition), with the stake costing more than the combined price paid for acquisitions of Instagram and Oculus. The Indian market is one that is crucial to Facebook and will continue to grow in importance in the coming years, and the investment in Jio marks an attempt to further cement their position as a major player in the country. Facebook currently sees more users based in India than in any other country and with internet users in India expected to grow rapidly this position will be consolidated further.

Stringent regulation in India has made it difficult for foreign tech firms to establish themselves in the past few years and Facebook has been limited by this, in 2016 their attempt to launch a ‘freebasics’ app aimed at providing access to digital services was blocked by Indian authorities who claimed it infringed net neutrality. The partnership with Jio could help Facebook avoid the restrictions imposed by lawmakers that have plagued multiple western tech firms in recent years with Jio enjoying many exemptions as a domestic firm. It also allows Facebook access to the mobile network market that may become more important for them going forward. For Jio the deal is not only one that gives them a cash inflow – it enables them work with the global leader in terms of monetising customers data. They are also said to be working to establishing a digital payments system through Facebook owned WhatsApp, which could be crucial in helping Jio expand into the sector.

A key mechanism in which the Facebook deal is set to benefit Jio is through combining the WhatsApp customer base of 400m users in India with Jiomart, Jio’s ecommerce branch. Jiomart has been launched in a market already contested by major US players – Amazon and Flipkart (Walmart backed) are currently the market leader, however, Jiomart has a number of advantages that could enable them to become the dominant market player. Jiomart aims to connect local shops and customers, and in partnering with Facebook has a unique access to huge potential market of WhatsApp’s 400m Indian users. Ambani appears set on using Jiomart to support small local shops known as ‘kiranas’ that provide everyday essentials, stating he wanted to “enrich” and “empower” the owners of the small retailers.

A kirana in Mumbai, Source: Saathealth

Under lockdown Jiomart has rapidly expanded in India, now delivering in 200 cities following a successful test period in the Mumbai area earlier in the year. Jio also has crucial advantages regarding regulation in this sector. In 2019 the Indian authorities restricted foreign owned platforms in selling inventories through their subsidiaries, whilst Jio remains exempt as a domestically based firm. There have also been data protection laws issued obliging foreign firms to store data locally, meaning Walmart and Amazon have encountered issues and have been forced to restructure their operations, again domestically based Jio are not adversely affected by this regulation. With close partnerships with local retailers and a unique advantage due to regulation Jiomart looks set to rapidly become a dominant player in Indian ecommerce.

What is next for Jio? There are expectations of further investments, with Arab sovereign wealth funds said to be interested in purchasing a stake. Saudi Arabia’s PIF are alleged to be in talks for a $1.5bn deal and Emirati Mubadala have been linked to an imminent potential $1.2bn investment. There are likely to be further US backers, with US-China tensions growing many may turn to India as it represents the next most promising market due to its large, young population and rapid economic expansion. There are also suggestions an IPO may be within the next couple of years, Ambani intends to list overseas with Nasdaq touted as a likely location for the highly anticipated listing.

Jio has enjoyed an unprecedented rise in Indian tech space, since launching in 2016 it has become the dominant telecoms operator in the country and more recently has moved into ecommerce and digital payments as part of a diversification across the tech industry. With a series of high-profile deals Jio is now in the global spotlight and rumours of an IPO are already attracting significant attention. With western financing and support combined with the unique advantages Jio has in the Indian market they appear set to become a major player in the tech industry and with an expanding market be seen as the Indian equivalent to Alibaba, rivalling them as Asia’s premier tech giant.