Jio carves out space for yet another US investor

It seems the US moneymen have a taste for Indian connectivity as General Atlantic becomes the fourth third-party firm to invest in the money-making machine which is Jio Platforms.

New York-based private equity firm General Atlantic has become the latest company to write a handsome $860 million cheque as table stakes for a 1.34% stake in Reliance Industries’ digital venture. Reliance Jio Platforms is looking like a very popular focal point for US investors attempting to tap into the rapidly developing Indian digital ecosystem.

In a matter of four weeks, Reliance Industries has managed to convince Facebook, Silver Lake, Vista Equity Partners and General Atlantic to part with almost $9 billion.

“I am thrilled to welcome General Atlantic, a marquee global investor, as a valued partner,” said Mukesh Ambani, Chairman of Reliance Industries. “I have known General Atlantic for several decades and greatly admired it for its belief in India’s growth potential.

“General Atlantic shares our vision of a Digital Society for India and strongly believes in the transformative power of digitization in enriching the lives of 1.3 billion Indians. We are excited to leverage General Atlantic’s proven global expertise and strategic insights across 40 years of technology investing for the benefit of Jio.”

While such warm words are usually offered irrelevant as to who the new investor is, General Atlantic is a useful company to have looped into the equation.

In the existing investment portfolio is, an Indian consumer-to-consumer real estate transaction platform, Doctolib, digital healthcare platform in Europe to connect health professionals and patients, and Quizlet, an online learning platform. This is a company which has experience in the technology world, but also a number of bets which would be very complementary for the existing ventures in Reliance Jio Platforms.

“As long-term backers of global technology leaders and visionary entrepreneurs, we could not be more excited about investing in Jio,” said Bill Ford, CEO of General Atlantic.

“We share Mukesh’s conviction that digital connectivity has the potential to significantly accelerate the Indian economy and drive growth across the country. General Atlantic has a long track record working alongside founders to scale disruptive businesses, as Jio is doing at the forefront of the digital revolution in India.”

To call Jio disruptive is somewhat of an understatement, and the business model does seem to be drawing more attention from some very interesting organisations around the world. With the telco business unit as the tip of the spear, there is a clear opportunity to drive forward a secondary wave of digital businesses as connectivity get democratised through the country.

Doctolib, one of General Atlantic’s investments, is a very interesting platform for a country where traditional healthcare infrastructure is sporadic. The Jio digital ecosystem could act as a springboard for the app in the market, while Jio is then invested in another venture. Its collaboration and differentiation.

Reliance Jio, the telecoms business, is a powerful force, but the most interesting ideas are the ventures emerging today. The businesses which are enabled by the connectivity revolution which is sweeping the country. This is why the likes of General Atlantic are interested in invested in Reliance Jio Platforms now, not two years ago; the vision is much bigger than phone calls and streaming cat videos. Daily Poll:

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Reliance Jio signs a third deal to add another $1.5bn to its bank account

Vista Equity Partners has become the third-largest investor in Reliance Platforms, purchasing a 2.32% equity stake in the disruptive business for $1.5 billion.

Following similar transactions with Facebook and Silver Lake, Vista will be become the third-largest investor in a business which is driving digital transformation and evolution in one of the worlds’ most attractive economies. Reliance Platforms, the business unit of Reliance Industries which incorporates all telecoms and digital ventures, is quickly becoming one of the worlds’ most interesting digital investments.

“We believe in the potential of the Digital Society that Jio is building for India,” said Robert Smith, CEO of Vista. “Mukesh’s vision as a global pioneer, alongside Jio’s world-class leadership team, have built a platform to scale and advance the data revolution it started.

“We are thrilled to join Jio Platforms to deliver exponential growth in connectivity across India, providing modern consumer, small business and enterprise software to fuel the future of one of the world’s fastest growing digital economies.”

As Smith highlights, Reliance Platforms is more than a telco. Jio, the telecoms business unit, might be the disruptive force in India being used to democratise connectivity, but this is only one branch of the business. Following behind the telecom revolution, Reliance Platforms is attempting to encourage digital transformation programmes in SMEs, healthcare and entertainment, through digital currencies, streaming platforms and big data.

This is perhaps what is exciting international investors; Jio is so much more than a telecoms giant. The team has the vision to appreciate that telecoms is simply the foundation on which to build bigger things atop. This is the difference between a telco which will be relevant into the future, and one which is at risk of falling into the commoditised connectivity business model.

For example, with low-cost connectivity tariffs, more Indian consumers and SMEs are encouraged into the digital economy. A telco will make money by enabling this, but it is a utility with limited potential. Reliance Platforms is using this as a vehicle to enable alternative digital payment platforms in a joint venture with Facebook, to create growth revenue streams not just sustainable ones. The profits will be realised through the second wave of disruption.

It is realising connectivity is only the first step, a nuance which is not evident through the communications of other telcos. This vision is perhaps what is most interesting to investors.

“Like our other partners, Vista also shares with us the same vision of continuing to grow and transform the Indian digital ecosystem for the benefit of all Indians,” said Mukesh Ambani, MD of Reliance Industries. “They believe in the transformative power of technology to be the key to an even better future for everyone.”

The business model which is slowly emerging out of Reliance Platforms is starting to look very exciting. Cut price and free voice tariffs might not make that much money, but they don’t have to if there is success in the secondary business models which are being enabled through the democratisation of connectivity.

This is the sort of business evolution which should be evident throughout the telecommunications industry but isn’t.

Twitter attempts to appease activist investor with board appointment

Small children are afraid of monsters under the bed, but for CEOs, its Elliott Management in the board room which will give them a cold sweat in the middle of the night.

In a move apparently designed to appease and mitigate the ambitions of the business world’s bogeyman, Twitter has announced a partnership with Elliott Management, as well as new investor Silver Lake, which will see three new board appointments and a $2 billion share buy-back programme.

Known as a vulture fund, Elliott Management specialises in identifying companies with underperforming shares, muscling its way onto the board through the purchase of material stakes in the business, before attempting to cash-in by introducing new strategies to boost share price. It is an incredibly disruptive business model, one which is designed for short-term financial gain, but it works.

In recent memory, Elliott Management has bought its way onto the Telecom Italia (TIM) Board of Directors before ousting CEO Amos Genish and effectively distinguishing the DigiTIM strategy. It has also thrown its weight around AT&T, demanding the head of CEO Randall Stephenson and the end to the media-driven business model. The companies being disrupted might not like Elliott Management, but it is an investment company which makes a lot of money.

Now the activist investor has turned its attention to Twitter. Through various different investment vehicles, Elliott Management now owns 4% of Twitter shares and it is demanding change. An alternative business model has not been presented to investors just yet, but the removal of CEO and Founder Jack Dorsey has been requested.

The announcement here is a very interesting one. Some companies have shown the intentions of Elliott Management can be resisted, National Express demonstrated this in 2011, though the activist investors certainly wins more often than it loses. Each element of this partnership could be viewed as an element of the strategy to combat the activist investor.

Firstly, in appointing Elliott Management Partner Jesse Cohn to the Board of Directors, the traditional Twitter comrades might be attempting to appease the intentions, or at least delay the aggression. Ignoring Elliott Management does not work, just ask Vivendi after the TIM fiasco, and although one Board appointment will not completely satisfy, it buys some breathing room.

This first element has had some immediate success; Elliott Management is no-longer demanding the resignation of Twitter CEO Jack Dorsey.

Secondly, bringing Egon Durban, co-CEO and Managing Partner of Silver Lake, onto the Board adds another friendly for Dorsey, and counteracts the Cohn presence. Silver Lake is a more traditional tech investor, much more likely to buy into the current Twitter strategy.

The final appointment will be somewhat of a land-grab. Whoever is successful in securing a position for their own nomination will find themselves with another friendly. Elliott Management will be fighting for its own appointment, while Dorsey and co. will be attempted to land their own. This independent appointment is likely to be as impartial as a White House probe into Huawei.

Finally, the share buy back programme remove shares from the free-for-all of the open market. Less shares which are on the market mean investors have less influence on the day-to-day operations of the company. It also comes at a time where market volatility make such initiatives an attractive bet for a corporation, but this could be viewed as a handy double-edged sword.

What is currently in play now at Twitter is a game of corporate chess. On one side of the table, Twitter wants to pursue the strategy it has been working towards for years. In opposition, Elliott Management is likely to pursue a model which favours higher dividend payments and short-term share price increases.

Although investors might be encouraged by the pump and dump practice which is favoured by Elliott Management, in most cases the alternative business strategies which it presents are not in the long-term interest of the business. For both TIM and AT&T, Elliott Management has favoured the divestment of differentiator business units and infrastructure assets. This might look attractive for short-term cash, but it does no favours for long-term sustainability of the business.

Its own vision for Twitter has not been presented just yet, but Elliott Management spend hundreds of millions acquiring 4% of the company for a reason. Precedent suggests there will be a disruptive business model presented to shareholders in the new future.