Private equity firm Silver Lake has shelled out $750 million for a 1.15% stake in the Indian telco, which represents a 12.5% premium on the price Facebook recently paid.
In the baffling Indian numbers, Silver Lake is handing over ₹5,655.75 crore at an equity value of ₹4.90 lakh crore (~$65 billion). When Facebook bought 10% of the company a fortnight ago, the valuation was more like $57 billion. While we don’t doubt Jio has had a cracking couple of weeks, something else must be going on for the price to shoot up so.
“I am delighted to welcome Silver Lake as a valued partner in continuing to grow and transform the Indian digital ecosystem for the benefit of all Indians,” said India’s richest man Mukesh Ambani, Chairman of Reliance Industries, Jio’s parent. “Silver Lake has an outstanding record of being a valuable partner for leading technology companies globally. Silver Lake is one of the most respected voices in technology and finance. We are excited to leverage insights from their global technology relationships for the Indian Digital Society’s transformation.”
“Jio Platforms is one of the world’s most remarkable companies, led by an incredibly strong and entrepreneurial management team who are driving and actualizing a courageous vision,” said Egon Durban, Silver Lake Co-CEO. “They have brought extraordinary engineering capabilities to bear on bringing the power of low-cost digital services to a mass consumer and small businesses population. The market potential they are addressing is enormous, and we are honored and pleased to have been invited to partner with Mukesh Ambani and the team at Reliance and Jio to help further the Jio mission.”
The reason for the premium remains unclear. It could be that the mere fact Facebook got involved made Jio Platforms 12.5% more attractive as an investment. Then again, as Tech Crunch speculates, Silver Lake could have bought a lower class of share, or is anticipating an imminent IPO. From Jio’s perspective, these infusions of cash could be contingencies against the depressed global economy or could be a war chest for further investment.