Jio again rose funding even during lockdown!
Four weeks, Four funding, $ 8Billion rose.
Mukesh Ambani who owns the Reliance Industries Limited; is the richest person in India. He personally invested $35 Billion in Jio and made it profitable in just 4 years.
Now, why is he raising fund again and again? Since, Reliance was primarily known for the traditional approach of self-investing.
Through this article we will try to understand why Jio is raising so much of funding, and would try to understand the future plans of Jio, the impacts of the Jio funding in Indian economy and ecosystem.
1st thing first, if Mukesh Ambani has thought to invest his time and effort somewhere; that simply means he has some crazy planning probably no one has thought so far !
During the lockdown, many of the startups are literally facing the serious challenge of financial loss. They had to cut down their employees’ salary and some startups fired huge number of employees even. Swiggy being one of them, if you haven’t read that yet, you can read it from here.
The main sufferers are the offline startups, who even stepped into different segments; but meanwhile Mukesh Ambani was playing his own game !
Let’s take a quick view-
-On 22nd April 2020, Jio platform raised funding of $5.7 Billion from Facebook Inc. in exchange of it 9.99% stake.
-On 4th May 2020, Silver Lake invested INR 5,656 Crore for 1.15% stakes.
– On 8th May 2020, Vista Equity Partners Invested INR 11,367 Crore in exchange of 2.32 % Stake
-On 17th May 2020, General Atlantic Invested INR 6,598 Crores for 1.34% stake.
If you missed to read about the Jio Deals, you can read this here for Free.
Now, let’s talk about the reasons why Jio is raising this much of funding.
Reason 1.The mission of Digital India–
Since during the launch of Jio from 2016, the mobile Internet penetration has literally hiked. It gave free internet to the users and emerged as the biggest telecom network of India.
And it was a clear vision to make India as a digital economy, therefore in almost every 3-4 weeks Jio started acquiring companies (like Grab, haptic, Saavn, fynd, Tesseract,DEN, hathway, Embibes, Reverie, Embibe) from different segments it was a hard puzzle to solve that time.
Even Ambani invested in Artificial intelligence, Machine Learning, Augmented Reality, Internet Of Things, and Big Data Analytics .
So, basically he is planning to connect all these companies and technologies to a common platform of Jio. Remember those Jio-chat app, Jio Saavan, Jio Express, Jio Money, Jio TV, Jio Cinema etc , and to integrate them properly, he is raising huge funding.
Reason 2. Help & Guidance In Technology–
“Hein…. !!! Are you mad or what! Reliance is mainly into Petro-chemical and oil industry, now it is entering in retail sector. Why would Reliance want to be a tech company?”
Well! This is my blog and I can write anything I wish.. 😛
(sorry for the lame joke)
Coming back to the topic, almost all of the most valuable companies of the world; be it Amazon or Microsoft; all of them are tech companies. And seeing the growth in these sectors, the Indian Business Magnate Mukesh Ambani is all set to step into tech sector.
Now, Reliance understood the growth factor in the tech sector as it is normally easy to raise valuation and user base.
Keeping this in mind, when Jio was launched, it was primarily focused on mobile data, as Ambani knew if he is planning to make the telecom company as a tech company he will need to focus on the technology and innovative team from the beginning
But yet after acquiring various tech companies he was lacking behind. Analyzing this issue as an opportunity, Facebook Inc. forwarded helping hand, which end up in Jio-Facebook deal.
Now, Facebook will not only help in technological aspects, but would solve the another issue that Jio is facing- “the less user base in its platforms( Jio-chat, Jio Movies,etc).
Jio then decided to use the whatsapp platform, as it has more than 400M users in India, and since whatsapp is very easy to operate.
The concept of Jio Mart came from here, which they have launched already.
“Data is the new Oil”, do you remember this statement made by Mukesh Ambani few years back?
When he told this everyone was praising him for this statement, but he has started implementing it.
Reason 3. The Debt Factor:
Till 2012 Reliance was going in its full swing without any debt. But they thought to do bigger in the industry, decided to offer free internet in India and ended up with $21 Billion Debt.
Reliance aims to become debt free by 2021, and this being one of the major reason , Jio is continuously raising funds.
Now, you might think “Why would Reliance want to become debt free so early. Why don’t they wait for few more years?”
Well ! The Zero debt reflects a very positive image in the eyes’ of investors.
Reason 4. The vision of 5G Technology-
You must have heard reports stating ‘Jio is ready for 5G or ready to upgrade whenever the new technology arrives’.
When companies like Vodafone Idea and Airtel is working with Huawei, since Huawei is very advance is 5G technologies.
But, Jio has some other plan, and if this is successful; the worlds will see a different India!
Jio is planning to manufacture the 5G technology by itself and therefore it acquired US based tech company ‘Radisys Technology’ in $67 Million, and has integrated it with its subsidiary ‘Rancore Technologies’, and are working in making the 5G equipment.
Even when India will start 5G services, the telecom company needs to buy the spectrum. And this might be a reason why Mukesh Ambani is collecting huge amount as a backup to buy spectrum!
And that’s all in this article. I am going to play Ludo King now. BTW if you haven’t read the Business and Revenue model of Ludo King, Do check this here. Their revenue in March 2020 will surprise you.
Disclaimer- The points mentioned in the articles contains the personal view of the writer and, is structured on the basis on facts and figures available on the web. The mentioned brand logo is/are the Intellectual Property right of its owner, and is used to provide relevancy to the topic.