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Facebook Invests $5.7bn in Reliance Jio, Ahead of its Talks to Build a Super App

Apr 22, 2020 6:36 PM 3 min read
Editorial

Jio Platforms, a wholly-owned subsidiary of Reliance Industries Limited today announced the signing of binding agreements with Facebook for an investment of ₹43,574cr ($5.7bn) into Jio Platforms, valuing the platform at a pre-money valuation of $65.95bn. Facebook’s investment gives it around 10% stake in the company, making it the largest minority shareholder.

 

Read Reliance's media release about the deal here.

 

"One focus of our collaboration with Jio will be creating new ways for people and businesses to operate more effectively in the growing digital economy,” said Chief Revenue Officer David Fischer and VP for India Ajit Mohan.

 

The development ties up with the recent news that Reliance Jio and tech giant Facebook are reportedly in talks to build a ‘super app’ of sorts.

 

We have a look at this interesting trend dominant in India’s digital ecosystem.

 

Flashback

All hell broke loose about two years back when Facebook-backed messaging platform WhatsApp released the Beta payments feature in its messaging app. Paytm Founder Vijay Shekhar Sharma took the lead, accusing Facebook of being “the most evil company in the world.” He was perhaps wary of the highly popular messaging app enhancing its moat to garner as much attention of the user as it can – an interesting trend observable in India’s digital space that is seeing a number of companies mould their single-functioning app into multi-functioning, so-called super apps.

 

Taking a cue from the Chinese giant WeChat, which began as a messaging service, and has over the years become a one-stop solution for a range of features - gaming, payments, social commerce and publishing platform, companies like Paytm and Amazon are also bundling other services to give users an all-in-one experience.

 

What began as a humble payments app, Paytm now enables users to text merchants, book movie, flight and train tickets, and buy shoes, books and just about anything from its e-commerce arm Paytm Mall. It also has added a number of mini games to the app. Not to forget the Paytm Payments Bank which provides all banking services.

 

And perhaps gauging the advantages of being a multi-faceted company, having reaped the benefits of its many verticals across oil, communication, grocery and clothing, Mukesh-Ambani led Reliance Industries Ltd is now planning to bring it all together. 

 

Reliance Jio, a subsidiary of Reliance Industries Ltd and tech giant Facebook are reportedly in talks to build a ‘super app’ of sorts, once again, along the lines of WeChat.

 

The plan is to leverage Facebook-owned WhatsApp's massive user base in India and create an app that would combine digital payments, social media, gaming as well as flight and hotel bookings, among other features. 

 

The app would not just be a communication platform but one where users would also be able to buy groceries through Reliance Retail stores, or shop at ajio.com, or make payments using JioMoney. 

 

Development of a super app is expected to provide Reliance with a two-fold benefit - B2C engagement for its consumer businesses, and provide the group insights on users’ spending habits. 

 

The ongoing discussions, however, have been delayed due to the pandemic.

FIN.

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