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Google Invests $4.5 Bn In Reliance Jio For 7.73%

Google Invests $4.5 Bn In Reliance Jio For 7.73%

Google is investing at an equity valuation of INR 4.36 Lakh Cr

Google and Jio will be creating an Android-based smartphone operating system to boost 4G/5G in India

The investment is a part of Google’s $10 Bn India Digitization Fund

Reliance Industries’ digital venture Jio Platforms has raised INR 33,737 Cr ($4.5 Bn) from global tech giant Google for 7.73% equity stake, Mukesh Ambani announced at Reliance’s 43rd Annual General Meeting (AGM). Google is investing at an equity valuation of INR 4.36 Lakh Cr.

During the AGM, Ambani also announced that Google and Jio Platforms will be developing an Android-based smartphone operating system that could power a value-engineered, entry-level 4G/5G smartphone to create a “2G mukt bharat.”

The investment comes only days after Google announced its plans to invest INR 75,000 Cr ($10 Bn) in India under the ‘India Digitization Fund’ to help the country unleash the potential of its digital economy. The company had highlighted that the fund would be used to invest in India through a mix of equity investments, partnerships and operational, infrastructure and ecosystem investments.

Sunder Pichai, CEO of Google, confirmed that the investment in Reliance’s Jio Platforms is a first and the biggest investment through ‘India Digitization Fund’. “I am excited that out joint collaboration will focus on increasing access for hundreds of millions of people, who don’t currently own a smartphone while improving a mobile experience for all,” Pichai added.

With this latest investment from Google, Jio Platform has raised a total of INR 152,056 Cr from leading investors like Facebook, Silver Lake, General Atlantic, KKR, TPG Capital, Abu Dhabi Investment Authority (ADIA), Mubadala Investment Company, Saudi Arabia’s Public Investment Fund, L Catterton, Vista Equity Partner and Intel Capital since April 22.

Morgan Stanley acted as financial advisor to Reliance Industries and AZB & Partners and Davis Polk & Wardwell acted as legal counsels. Meanwhile, law firms Freshfields Bruckhaus Deringer US LLP and J. Sagar Associates advised Google on the transaction. Google is currently the third-largest stakeholder in Jio Platforms, following tech giant Facebook that hold a 9.99% equity stake in the company and Reliance Industries that hold the rest of the business.

According to media reports, both Google and Microsoft were in line to invest in Jio Platforms for 6% each, but it did not make business sense for the company to give up a significant chunk of its business away. Therefore, Ambani was contemplating choosing one partner over another.

Founded by Larry Page and Sergey Brin in 1998, Google has a dominant position in online video (YouTube), email (Gmail), search, smartphone OS (Android) and web browser (Chrome), and it’s also a critical part of the global cybersecurity infrastructure through various sub-groups within the company, and enjoys a prominent position in the digital advertising space, along with Facebook.

When one considers the massive adoption for Google’s tech ecosystem in India in recent years, Jio has played a major part in that growth thanks to the penetration of its 4G services. This has not only helped push Android deeper into the country but has brought more users to Google search and YouTube, even from rural India.