Reliance Jio has been in the news a lot lately, and for all the right reasons. In an environment of overall gloom and fear, the firm has been able to attract the best of investors at attractive valuations, becoming the preferred stock of most people on the street.
In today's post, we dive into the investors who have entered the firm to date, the potential rationale for these investors, and explore the possibility of Jio listing on the NASDAQ.
The investors rush in
Almost every other day the behemoth that Reliance has built gets interest from another Global player. Facebook was the first to join the race, investing US$5.7bn for an ~10% stake in the firm. Silver Lake Partners joined soon after with US$747 million, followed by a US$1.5bn infusion from Vista Equity Partners.
During the same time, the firm was also beginning to work on its rights issue in a plan to de-lever ahead of the planned March 21 target. Folks were already quite impressed with the interest the firm was able to generate when Mota Bhai brought in the trump cards with two of the best PE firms in the world, KKR and General Atlantic bringing in US$1.5bn and US$870million respectively.
The investor and their rationale
If you look at the investors who have bought into the firm, barring Facebook all others are pure investment firms, who would be looking to make a good buck when the firm goes for IPO in a year or two.
When it does it will probably be one of the best ways to play the India tech story, with Jio platforms having exposure to everything from the market-leading Telco in the country, to music streaming (Jio Saavn), movie streaming (Jio Cinema), Ecommerce/hyperlocal platform (JioMart), digital payments via JioMoney and a lot more!
With the firm already valued at north of US$60bn, the IPO will have to be at extremely attractive valuations to make sense for the investors who have entered today. The international markets are a lot better equipped to value and provide liquidity to high-value tech IPOs. The combination of these factors may well move the firm to list on an international exchange instead of the country.
The road ahead
There is an inherent conflict here that Reliance will grapple with as well - The tradeoff between enhancing the exits for the investors who have just come in, and keeping the Indian Investors who have been with the company through thick and thin happy.
With the government also keen to enhance the sources of cash to Indian firms, changes to corporate laws to make dual listings possible could be considered. This will allow Indian investors to participate in the Jio growth story while also allowing the firm to get access to a broader range of investors.
It will be interesting to see how things pan out for what this emerging behemoth!