Asia's richest man gets $1.5 billion from Saudi Arabia for his tech war chest

[Vanguard One]

In less than two months, Indian billionaire Mukesh Ambani has amassed more than $USD 15 billion ($AUD 21.8 billion) in investments to fuel his technology ambitions from the likes of Facebook and top Silicon Valley investors Silver Lake and TPG.

Now he has attracted a powerful new investor with deep pockets: Saudi Arabia.

The kingdom's sovereign wealth fund, the Public Investment Fund (PIF), will pay $USD 1.5 billion for a 2.3 per cent stake in Jio Platforms, the digital technology arm of Ambani's sprawling conglomerate Reliance Industries.

The deal values Jio Platforms at close to $USD 68 billion.

Mukesh Ambani attends the Javed Akhtar's 75th birthday celebration on January 17, 2020 in Mumbai, India. (Getty)
It's the tenth major investment in Jio Platforms since April, when Facebook bet $USD 5.7 billion in one of its biggest ever deals.

That deal offered Facebook a crucial foothold in India's fast-growing internet market and further cemented Ambani's position as a kingmaker in the region.

The social media company has hundreds of millions of users in India and has already invested heavily into growing its own business, but has run into a series of regulatory hurdles in recent years.

Thanks to the fundraising blitz and a recent $USD 7 billion share sale, Reliance Industries said on Friday that it is now debt free. The company said its net debt at the end of March was 1.61 trillion rupees ($USD 21 billion).

Ambani, Asia's wealthiest man, launched Jio as a telecom network in late 2016 and has since signed up 388 million subscribers. Jio also has an ecosystem of apps, offering those millions of mobile users everything from online grocery shopping and digital payments to video streaming.

Facebook poured almost $USD 6 billion into Jio Platforms. (AAP)
Analysts say Ambani's ultimate ambition is to build the next global technology company, one that can hold its own against the likes of Google, Tencent, Amazon and Alibaba.

The backing of the Saudi wealth fund, which has investments in several Silicon Valley firms including Uber and Tesla, will help Ambani further that ambition.

"I welcome PIF as a valued partner in Jio Platforms and look forward to their sustained support and guidance as we take ambitious steps to accelerate India's digital transformation," Ambani said in a statement.

Jio has emerged as the prime conduit to cash in on India's internet boom, with more than 600 million internet users and nearly an equal number yet to come online for the first time.

"We believe that the potential of the Indian digital economy is very exciting and that Jio Platforms provides us with an excellent opportunity to gain access to that growth," PIF governor Yasir Al-Rumayyan said in a statement.

https://www.9news.com.au/national/i...i-arabia/9461c693-576f-4199-9834-045312434a1f

 

[Robbie]

He has done an extraordinary job with Jio.

 

[xeuss]

Not to take away from Ambani's and Jio's achievements, but these fall under what is called "safe investments". Seems like opportunities are thinning in India so large investment banks are forced to keep piling on in the winning horse. Great for Ambani, but not so great for India.

 

[Shantanu_Left]

He's making a hell lot of money by CONNING investors.

 

[Protest_again]

That's 15 billion FDI to India in an uncertain China virus period.

 

[tower9]

Only a matter of time before India builds some formidable tech giants. Really surprised it hasn't done so already.

 

[Robbie]

Not to take away from Ambani's and Jio's achievements, but these fall under what is called "safe investments". Seems like opportunities are thinning in India so large investment banks are forced to keep piling on in the winning horse. Great for Ambani, but not so great for India.

What do you feel are the factors leading to thinning of opportunities?

 

[Soumitra]

Not to take away from Ambani's and Jio's achievements, but these fall under what is called "safe investments". Seems like opportunities are thinning in India so large investment banks are forced to keep piling on in the winning horse. Great for Ambani, but not so great for India.

Then why even invest even in Ambani? There are 200 other countries these people could have invested in.

What do you feel are the factors leading to thinning of opportunities?

He speaks like this only because he doesn't like the present government of India. He cant digest anything good happening in India.

 

[Protest_again]

Only a matter of time before India builds some formidable tech giants. Really surprised it hasn't done so already.

Till now, domestic market couldn't support it's own tech giant. The would-be giants have all been bought off as the govt never restricted or protected them from outside competition. Now that the market is somewhat decent size($3 trillion), I expect companies coming up with innovative ideas for domestic market and expand outwards. Look up Oyo.

 

[xeuss]

What do you feel are the factors leading to thinning of opportunities?

Crony capitalism is probably the major one. Why would anyone invest in any other company?

I recall seeing some data released by RBI sometime earlier that the Indigo aircraft acquisition and the Reliance Jamnagar refinery as the two major FDI points in India. Other than that, a lot of private sector projects were paused because of lack of funds (FDI).

Since the general economic malaise that has gripped India since demonetization, funds have been reluctant to invest because of low or no returns, especially when there are other opportunities around the world. For those who want to invest in India due to sector/geographic/demographics, it is safer to go with the strongest companies in those sectors.

To answer your question further, I suspect that fraudulent accounting also has a role to play. With the spectacular failure of a lot of big names in India, I believe that there is a lack of trust when the books are being scrutinized. Another reason to stick with the winners.

If you study each sector in India, over the years, what was a competitive market has now shrunk to a monopoly.

 

[Armchair]

Wish Indian IT could have spotted the beating Indians got in Galwan and had managed to rescue them before they died in the cold. Chinese are saying the Indians were too scared to even retrieve their injured and came back for them near dawn. Perhaps some billions in IT infrastructure can ensure this doesn't happen in the future.

 

[Protest_again]

Crony capitalism is probably the major one. Why would anyone invest in any other company?

I recall seeing some data released by RBI sometime earlier that the Indigo aircraft acquisition and the Reliance Jamnagar refinery as the two major FDI points in India. Other than that, a lot of private sector projects were paused because of lack of funds (FDI).

Since the general economic malaise that has gripped India since demonetization, funds have been reluctant to invest because of low or no returns, especially when there are other opportunities around the world. For those who want to invest in India due to sector/geographic/demographics, it is safer to go with the strongest companies in those sectors.

To answer your question further, I suspect that fraudulent accounting also has a role to play. With the spectacular failure of a lot of big names in India, I believe that there is a lack of trust when the books are being scrutinized. Another reason to stick with the winners.

If you study each sector in India, over the years, what was a competitive market has now shrunk to a monopoly.

So would you tell UNCTAD that it got it wrong when it comes to their figures about FDI into India? Because India has been top 10 FDI receivers per them all the years since the demonetization. Obviously they didn't consult you for official figures. UNCTAD is not dependent on Indian data by the way.

 

[Robbie]

He speaks like this only because he doesn't like the present government of India. He cant digest anything good happening in India.

I think he is somewhat right. I may be wrong, but the way I understood his post is that since other opportunities in the market (of the type and scale of global investment banks) are declining, capital is getting attracted more easily to projects like Jio.

 

[Protest_again]

I think he is somewhat right. I may be wrong, but the way I understood his post is that since other opportunities in the market (of the type and scale of global investment banks) are declining, capital is getting attracted more easily to projects like Jio.

India has been in the top 10 FDI receiving countries for past 4 years. Tell me which other big companies have the foreign investors invested all these years that are safe bet. Jio for all its success is only 4 year old company. Don't fall for his narrative, he's just anti-modi and would even twist facts to prove it. JIO is just great an opportunity for anyone to miss out on, that's all.

 

[Robbie]

Crony capitalism is probably the major one. Why would anyone invest in any other company?

I recall seeing some data released by RBI sometime earlier that the Indigo aircraft acquisition and the Reliance Jamnagar refinery as the two major FDI points in India. Other than that, a lot of private sector projects were paused because of lack of funds (FDI).

Since the general economic malaise that has gripped India since demonetization, funds have been reluctant to invest because of low or no returns, especially when there are other opportunities around the world. For those who want to invest in India due to sector/geographic/demographics, it is safer to go with the strongest companies in those sectors.

To answer your question further, I suspect that fraudulent accounting also has a role to play. With the spectacular failure of a lot of big names in India, I believe that there is a lack of trust when the books are being scrutinized. Another reason to stick with the winners.

If you study each sector in India, over the years, what was a competitive market has now shrunk to a monopoly.

I think you're right on major parts and I am interested in exploring this further.

I agree that fraudulent accounting and crony capitalism have eroded confidence in brand India. Honestly, I think it was well deserved. Far too many of these iconic Indian companies(Singh brothers, Essar, etc) were running shams. Accounting sector had no regulator (they had self-regulation), the banks were evergreening loans, losses were socialized, profits were privatized.

Now, there is an accounting regulator, but we don't know how effective it will be. Certainly accounting firms have been made to pay a steep price for their indiscretions, so I think general accounting quality would have improved. Secondly, now that there is limited to no instructions to PSU banks to keep evergreening loans, a lot of companies have gone under IBC. That, in my opinion, has been a crowning achievement of this Government.

However, that means that the corporate sector that thrived on debt over the last decade will take another decade to recover before they invest again and many will not survive.

Demonetization and ensuing economic malaise have led to stagnation but that is in the 'real economy' so to speak, not in the digital economy. If anything, they have gotten a boost with demonetization and GST. So ideally, the other tech companies and startups should still be lining up investors, but that has not happened.

India has been in the top 10 FDI receiving countries for past 4 years. Tell me which other big companies have the foreign investors invested all these years that are safe bet. Jio for all its success is only 4 year old company. Don't fall for his narrative, he's just anti-modi and would even twist facts to prove it. JIO is just great an opportunity for anyone to miss out on, that's all.

There's many factors to explore on two things -
1. India is hitting far below its potential in getting global IB to fund Indian companies
2. Indian economy is going to go back to its average of 5 to 6% growth next year onwards. What are the factors that are preventing it from growing at 8%