CCI okays Facebook’s investment of Rs 43,574 crore in Jio Platforms
On April 22, Facebook said it will invest Rs 43,574 crore in Jio Platforms for a 9.99% stake in an all-cash deal that will help the oil-to-retail conglomerate reduce debt and strengthen the social media company’s presence in its largest market, especially for its WhatsApp unit.
MUMBAI: The Competition Commission of India (CCI) approved Facebook’s purchase of a stake in Jio Platforms for Rs 43,574 crore, a deal that will strengthen the social media company’s presence in its largest market and help Reliance Industries Ltd (RIL) pare debt.
“The Competition Commission of India (CCI) approves acquisition of 9.99% stake in Jio Platforms by Jaadhu Holdings LLC,” said a government press release. Jaadhu is an “indirect wholly owned subsidiary of Facebook (and is a) newly incorporated company formed in March 2020 under the laws of the state of Delaware, US.”
Jio Platforms houses RIL’s telecom business under Reliance Jio Infocomm, the largest in the country with nearly 400 million subscribers, besides other digital properties and investments.
The regulatory approval came about two months after the two companies signed a deal that was touted to be the largest investment for a minority stake by a technology company anywhere in the world. It was also said to be the largest foreign direct investment (FDI) in the technology sector in India.
May Encourage Other Tech Cos: Analysts
The deal won’t need any further approvals as the acquisition is below the 10% threshold, said people with knowledge of the matter.
The deal may open up the debt-laden telecom sector for other technology and Internet players, say analysts. “CCI approval helps both the companies to put their energies around the digital commerce initiatives and it may also encourage other FAANG names to look at Indian telcos,” said Rajiv Sharma, head of research at SBICap Securities. Facebook pegged Jio Platforms at Rs 4.62 lakh crore pre-money enterprise value.
FAANG is an acronym for Facebook, Amazon, Apple, Netflix and (Google parent) Alphabet.
There have been reports of Google and Amazon exploring deals with Vodafone Idea and Bharti Airtel, respectively, recently, but there is no confirmation of any such developments
Facebook was the first of 10 global entities that are buying a total 24.70% stake in Jio Platforms for Rs 1.16 lakh crore. These investments, along with Rs 53,124 crore from a rights issue, are helping Mukesh Ambani achieve his aim of making RIL net debt free.
The other nine investors include Abu Dhabi’s two largest sovereign investment arms, Abu Dhabi Investment Authority and Mubadala, along with private equity firms Silver Lake, Vista Equity Partners, General Atlantic, KKR, TPG, L Catterton and Saudi Arabia’s Public Investment Fund.
RIL closed at Rs 1,727.35, up 0.4%, on the BSE Wednesday. The approval announcement came after market hours.