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Google values Jio Platforms Rs 55,000 crore lower than other investors

"Today, we have signed a binding partnership and an investment agreement with Google under which Google will invest Rs 33,737 crores for a 7.7% stake in Jio Platforms. This transaction is subject to regulatory and other customary approvals," says Ambani

Manoj Sharma | Mudit Kapoor | July 15, 2020 | Updated 23:49 IST
Google values Jio Platforms Rs 55,000 crore lower than other investors
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Reliance Industries Limited (RIL) Chairman Mukesh Ambani, during the company's 43rd Annual General Meeting on Wednesday, announced global tech giant Google would invest Rs 33,737 crore in Jio Platforms Limited (JPL) for a 7.73 per cent stake at an equity valuation of Rs 4.36 lakh crore. With this investment, strategic and financial investors have committed a total of Rs 152,056 crore in the company since April, Ambani said.

"Today, we have signed a binding partnership and an investment agreement with Google under which Google will invest Rs 33,737 crores for a 7.7% stake in Jio Platforms. This transaction is subject to regulatory and other customary approvals," Ambani said.

However, it's interesting to note that Google, which is the 13th investor in Jio Platforms in around three months, has valued Ambani's Jio Platforms Rs 55,000 crore less in terms of equity value than the rest of the investors, excluding Facebook.

Also Read: What is Reliance Jio Glass?

Investments from the previous investors, including Vista, General Atlantic, KKR, Mubadala, TPG, L Catterton, Intel Capital and Qualcomm Ventures have valued the company at an equity value of Rs 4.91 lakh crore and at an enterprise value of Rs 5.16 lakh crore. The only exception was Silver Lake which valued it tad lower at Rs 5.15 lakh crore.

Equity value is found by taking the company's fully-diluted shares outstanding and multiplying it by a stock's current market price, while Enterprise Value (EV) is the measure of a company's total value and it looks at the entire market value rather than just the equity value, so all ownership interests and asset claims from both debt and equity are included.

Information about enterprise value of JPL in deal with Google and equity value in case of deal with Facebook are not publicly available.  

Reliance has so far sold 32.97 per cent stake in Jio Platforms to raise Rs 1.52 lakh crore. A big reason behind stake sale in Jio Platforms was Ambani's aim to make RIL a net debt-free company.

During last year's AGM speech, Ambani had shared goals of growing the business through partnerships and achieving a "net debt-free" balance sheet. "I am happy to report that we have fulfilled this promise well ahead of the timelines that we had set ourselves," Ambani said today. RIL became a net debt-free company in June, months before its target of March 31, 2021, after raising over Rs 1,68,818 crore in just 58 days via a rights issue and by roping in global tech investors.

Jio Platforms is now a crown jewel of Mukesh Ambani since revenue from the company's petrochemical business has taken a hit while earnings from Jio and retail segments have picked up.

JPL was created as a subsidiary of RIL in October last year to bring together all digital and mobility businesses under one roof. The new entity has become the parent of Reliance Jio Infocomm and applications like MyJio, JioTV, JioCinema, JioNews and JioSaavn, besides content-generation ventures.

For making JPL debt-free, the parent company has infused Rs 1.08 lakh crore. The Indian conglomerate has spent about Rs 4 lakh crore to build Reliance Jio alone. Reliance wants to build JPL into a tech giant like Alibaba and Google, which claim high valuations in the stock markets. RIL has been using the cash flow from its flagship petroleum refining business to build the telecom and retail subsidiaries.

Also Read: Google to invest Rs 33,737 crore in Jio Platforms

Also Read: RIL 43rd AGM: Jio is 5G ready, to be deployed next year

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