Ambani’s ambition to turn Reliance into internet titan wins backing

Digital diversification looks prescient as group’s core energy businesses face downturn.

Mukesh Ambani is under pressure to show he can bring his newer ventures to maturity, deliver deals to generate cash and alleviate Reliance’s debt burden

When Donald Trump visited India in February, the country’s richest man Mukesh Ambani pitched directly to the president on why US companies should work with his telecom and digital services business Jio Platforms.

“We’re the only network in the world that doesn’t have a single Chinese component,” Mr Ambani, chairman of the Reliance Industries conglomerate, told him. “Oh, that’s good,” said Mr Trump with an approving grin. “Put a bid in.”

Since then, as the spread of coronavirus sparked an anti-China backlash in both countries, US investors including Silicon Valley titans have made their moves, with Jio agreeing four deals in the last month.

General Atlantic, the private equity group, on Sunday said it would invest $870m into Jio at a $65bn valuation, after investments earlier this month of $1.5bn from Vista Equity Partners and $750m from Silver Lake.

They followed a $5.7bn investment in late April from Facebook, the social media group’s largest apart from the 2014 acquisition of WhatsApp.

The string of US deals is a big boost to Mr Ambani’s attempt to reposition his sprawling energy-heavy conglomerate as a homegrown consumer internet giant, India’s answer to the likes of China’s Alibaba. For Jio’s American investors, it ties their fortunes in the booming Indian market — arguably the most promising outside China — to the country’s most powerful tycoon.

Jio “is the most ambitious company I have ever seen”, said one person familiar with the deals. “It’s Vodafone, plus Tencent, plus a [handset] maker . . . Very rarely do you make the transition to being a great technologist, but they have managed to do that.”

Separately, Saudi Arabia’s Public Investment Fund is in talks with Jio to invest about $1.5bn, a person familiar with the discussions said. PIF declined to comment.

Since inheriting his father’s oil products business in 2005, Mr Ambani has pushed Reliance Industries into retail, telecoms and technology from streaming and payments to ecommerce. Mr Ambani said he would spin off and list Jio within five years.

Robert Smith, Vista’s founder and chairman, said that Jio was poised to propel a wave of internet adoption among Indian consumers and small businesses. “Mukesh Ambani’s vision for a digital transformation of India’s economy is being brought to life through the power of Jio’s platform.”

Reliance bet early that its newer ventures, rather than its legacy oil and chemicals businesses, would drive future growth, said another person familiar with Jio’s strategy. “It’s a great shift in terms of where the value will come from, and where the market expects to see value going forward.”

With Mr Ambani’s core energy businesses facing a protracted global downturn, that digital diversification looks ever more prescient. He is under pressure to show he can bring his newer ventures to maturity, deliver deals to generate cash and ease Reliance’s debt burden. Mr Ambani has vowed to cut net debt of more than $20bn to zero within a year.