Reliance Industries announced that Google planned to invest $4.5bn into its fast-growing digital business Jio Platforms, joining a dozen other international investors including Facebook that have poured a total of $20bn into the group in recent months.
Mukesh Ambani, Reliance’s chairman and India’s richest man, said the US tech group would take a 7.7 per cent stake in Jio, part of his sprawling energy-to-retail conglomerate.
Since Facebook first said it would invest $5.7bn into Jio in April, Reliance has sold stakes totalling 33 per cent of the young digital company to everyone from Silver Lake to KKR to Saudi Arabia’s Public Investment Fund.
“Jio is now the undisputed leader in India,” Mr Ambani said at the company’s annual meeting.
But the Google news was damped by an announcement by Reliance that a deal with Saudi Aramco to sell 20 per cent of the Indian conglomerate’s refining unit will be delayed, sending its share price 4 per cent lower.
The proposed investment by Saudi Aramco was announced last year as part of a pledge by Reliance to cut to zero the net debt of more than $20bn it took on in building Jio. But Mr Ambani said that target had already been achieved thanks to the recent flurry of deals for its digital business.
“Due to unforeseen circumstances in the energy market and the Covid-19 situation, the [Saudi Aramco] deal has not progressed as per the original timeline,” Mr Ambani said. “Our equity requirements have already been met.”
One person familiar with the deal said it is likely that it will need to be restructured and any payments deferred to take into account financial pressures facing Saudi Aramco, which is battling an oil-demand collapse and price crash.
The Saudi state energy giant has maintained that the agreement reached in 2019 was a letter of intent and very early in any deal process.
For Reliance, tapping India’s booming market for data and online services through Jio represents what it considers its biggest future growth area.
Since its 2016 launch, Jio has attracted 388m subscribers and expanded into everything from broadband to ecommerce. Reliance also operates the country’s largest brick-and-mortar retail chain.
The company said it would partner with Google to develop an Android-based smartphone operating system and has already joined forces with Facebook’s messaging service WhatsApp to offer grocery delivery.
Reliance also said it had developed a 5G service that is ready for trials and deployment as soon as next year.
Google earlier this week launched a fund to invest $10bn in Indian digital businesses in the coming years. The Jio stake is the largest investment it will make through the fund, Sundar Pichai, chief executive of Google and its parent company Alphabet, said.
“Through this partnership with Jio Platforms, we see the chance to have an even greater impact than either company could have alone,” Mr Pichai said. “I’m excited that our joint collaboration will increase access for the hundreds of millions of Indians who don’t own a smartphone.”