Google has agreed to invest ₹337 billion ($4.49 billion) into Jio Platforms, the Indian telco and online service provider that’s set to become the tech engine powering the country’s agrifood ecosystem.
As a result of the Google deal, Jio — a unit of Mumbai-based conglomerate Reliance Industries — has raised total external funding of ₹1.52 trillion ($20.2 billion) in less than three months.
In a statement, Reliance Industries said that Google’s investment will give it a 7.73% equity stake pending regulatory approval, and takes Jio to a valuation of ₹4.36 trillion ($57.9 billion.)
Under their new partnership, the two companies will seek to accelerate the digitalization of Indian homes and businesses, “beyond the current 500 million-plus internet users in the country” – hinting at their ambitions to increase connectivity and online services penetration in India’s rural areas. The duo have also agreed to jointly develop an entry-level affordable smartphone that will run on Google’s Android operating system, with the objective of getting more Indians in remote and rural areas connected to the net.
The Jio deal is Google’s first out of its $10 billion Google for India Digitization Fund, which it launched earlier this week to bankroll businesses, partnerships, and infrastructure in areas such as agriculture and health.
The funding frenzy for Jio began in late April, when Facebook announced it would pump ₹436 billion ($5.7 billion) into the business. Since then, several of the biggest names in tech, private equity, and sovereign wealth have rushed to back Jio, sensing opportunity in its 388 million-strong subscriber base, portfolio of popular mobile apps, and e-commerce and digital payments businesses.
Here’s the timeline:
April 22 – Facebook invests $5.7 billion in Jio to acquire a 9.99% equity stake. Reliance says that Facebook’s involvement will help further Jio’s “vision […] to enable a ‘Digital India’ for 1.3 billion Indians and Indian businesses, especially small merchants, micro-businesses, and farmers.” Collaboration between the two will “focus [on] India’s 60 million micro, small, and medium businesses, 120 million farmers, 30 million small merchants, and millions of small and medium enterprises in the informal sector.”
May 4 – Silver Lake Partners invests $750 million. The California-based private equity firm counts Airbnb, Alibaba, Ant, Dell, and Twitter among its other investments. “Jio [is] bringing the power of low-cost digital services to a mass consumer and small businesses population. The market potential they are addressing is enormous,” says Silver Lake co-CEO and managing partner Egon Durban.
May 8 – Vista Equity Partners invests $1.5 billion for a 2.32% stake. The Texas-based firm focuses on investments in enterprise software, data, and tech enablement.
May 17 – General Atlantic invests $870 million for a 1.34% stake. Having earlier invested in companies such as ByteDance, Facebook, Slack, Snapchat, and Uber, the New York growth equity firm says it’s backing Jio because of its “transformational impact in democratizing data and digital services, propelling India to be positioned as a leading global digital economy.”
May 22 – KKR invests $1.5 billion in return for 2.32% of Jio, marking the US private equity firm’s largest single funding deal in Asia to date.
June 5 – Silver Lake Partners invests an additional $602 million, upping its stake to 2.08%. Mubadala, a sovereign wealth fund from the UAE, invests $1.2 billion for a 1.85% stake. The Abu Dhabi-based fund says it invests “across sectors that are driving global growth and addressing critical challenges,” including “transformative information and communications technology investments [in] cognitive computing, infrastructure, telecoms, and satellite operations.”
June 7 – Abu Dhabi Investment Authority, another UAE sovereign fund, invests $750 million for a 1.16% stake.
June 13 – Connecticut-based private equity firm L Catterton invests $250 million for 0.39% of Jio, while TPG Capital invests $600 million in return for a 0.93% stake. The US alternative asset investor describes Jio as “a disruptive industry leader that is empowering small businesses and consumers across India by providing them with critical, high-quality digital services […] setting the tone for all technology companies to come.”
June 18 – The Public Investment Fund, a Saudi Arabian sovereign wealth vehicle, invests $1.49 billion for a 2.32% stake.
July 3 – Intel Capital, the VC arm of US chipmaker Intel, invests $254 million for a 0.39% stake.
July 12 – Another US semiconductor giant, Qualcomm, acquires a 0.15% stake for $97 million via its VC arm, Qualcomm Ventures.
July 15 – Google stands to get a 7.73% stake in return for its $4.49 billion investment.
These big-ticket investments are about more than just tapping into India’s food and agriculture value chain. Nevertheless, the reach that Jio and Reliance have, coupled with the popularity of Google and Facebook products in India, means that the impact on the country’s agrifood system will be significant.
For a start, Facebook’s WhatsApp messaging service has close to 400 million users across the country, and is widely used by farmers, alongside Facebook itself, to share information and best practices.
Google’s Android is far and away the most popular smartphone platform in India, with almost 91% share of the mobile operating system market as of last year.
As for Jio itself and its parent Reliance, they already provide on-farm support through products such as Jio Krishi. The mobile app provides smallholders with advice on precision farming techniques, planting, irrigation, and pest control, and send tailor-made alerts on local weather conditions and pest problems.
Moreover, the Indian government recently rolled out a series of agricultural reforms which, among other things, substantially lowers state licensing requirements to allow farmers to sell their produce directly to a wider variety of buyers.
“While the reforms create significant opportunities for agri-tech marketplaces in India, Reliance is probably best placed to scale the offering versus other providers,” says Shitiz Synghal, consultant at Areté Advisors in Gurgaon, India
In a country like India, where about 85% of the farmers are small-scale and marginal, digital-only solutions do not work, he tells AFN. Rather, ag marketplaces and other agritech startups dealing directly with farmers need to establish an on-the-ground presence.
“Scaling up such operations in a cost-effective way, while leveraging digital platforms for support, is a challenge – even for relatively well established players like Ninjacart,” says Synghal.
“Having already penetrated farmer households through the Jio and WhatsApp networks, Reliance has already established a stronger digital platform than any other player. Leveraging the [rural transformation-focused] Reliance Foundation and its network of implementation agencies with their ground teams, it has the potential to achieve massive physical scale as well.”
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