The Indian telecommunications market has always been of interest to big money investors, but over the last few months we have seen some significant action. In the last few days, Reliance Jio has sold off stakes in itself to both the private equity firms L Catterton and TPG Capital. The former is putting in $250M for a 0.39% stake, while the latter spent $598M or so for a 0.93% stake.
The two join seven other investors in taking slices of Jio led by Facebook, KKR, and Silver Lake. Why are they doing this? Because the only safe way to access the Indian telecommunications market has ever been to piggyback on a player with the necessary infrastructure and connections already in place. Jio has shaken up the market to the point that they are now the 1000lb gorilla that sits wherever it wants, so they are the proper vehicle.
But why does Jio want the money? Well, while they don’t need the outside investment themselves, it seems what we are seeing is the parent company Reliance Industries cashing out on its success in the space. They spent heavily to create Jio in the first place, and these investments enable them to pay off some of the debt they raised to do it while still maintaining control of the company. So far these outside investors have purchased about 22% of Jio.
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