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Facebook-Jio: Twitter Investor Silver Lake Signals Deal Approval


Nov. 20 2020, Updated 5:15 p.m. ET

At $202 per share at the closing on May 1, Facebook (NASDAQ:FB) stock has risen more than 18% since it invested $5.7 billion to purchase a stake of 10% in Jio Platforms. Notably, Jio is the wireless and digital services arm of Indian conglomerate Reliance Industries. In what seems to be a vote of approval of the Facebook-Jio deal, private equity fund Silver Lake joined Facebook with an investment in Jio Platforms.

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Silver Lake has invested about $750 million in Jio, which gives it a stake of about 1.0% in the unit. The Facebook-Jio deal brings cash that’s expected to help Reliance eliminate its debt. Reliance had $42 billion in debt as of June 2019. Therefore, the Silver Lake investment provides another boost to Reliance’s debt reduction efforts.

Silver Lake has about $40 billion in assets under management. Also, the fund has a history of investing in technology companies. The company’s investment portfolio includes Twitter (NYSE:TWTR), Expedia (NASDAQ:EXPE), Alibaba’s (NYSE:BABA) Ant Financial, Airbnb, and Alphabet’s (NASDAQ:GOOGL) self-driving unit Waymo. The fund invested $1.0 billion in Twitter in March.

The investment and the resulting arrangement helped Twitter avert a potential showdown with hedge fund Elliott Management. Twitter will use the Silver Lake investment and cash on hand to repurchase $2.0 billion of its stock.

Facebook-Jio deal eyes India’s ecommerce industry

Facebook and Jio teamed up with an eye on India’s e-commerce and digital payments industries. Overall, the companies aim to help tens of thousands of small businesses in India sell their items online. Just days after the investment, Facebook and Jio launched a service that lets Indians shop from local stores through WhatsApp.

Jio operates the largest wireless phone network in India with close to 400 million subscribers. WhatsApp is one of the largest social apps in India, which boasts more than 400 million users. About 1.0 million small businesses in India also use WhatsApp to connect with customers. Notably, the Facebook-Jio deal comes as WhatsApp tests a mobile payment service in India.

The e-commerce and digital payment markets in India, which Facebook and Jio have their sights on, are growing rapidly. India’s retail e-commerce sales are on pace to hit $72 billion in 2022, which is more than double from $32.7 billion in 2018. India’s digital payments transactions are on course to hit $1.0 trillion in 2023 compared to $200 billion in 2018.

Regarding the Facebook-Jio deal, Silver Lake noted that Jio has an enormous potential addressable market.


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