BENGALURU—Facebook will buy a 10 percent stake in the digital business of India’s Reliance Industries for $5.7 billion, as the social media firm looks to leverage its highly popular WhatsApp chat service to offer digital payment services to small businesses in India.
The deal will help the Indian conglomerate cut debt that has piled up in its expensive push to secure top spot for its Jio Infocomm telecom business.
WhatsApp is trying to secure approval to roll out its digital payment service in India, which will see it compete in a crowded market with the likes of Google Pay and Paytm. The approval to expand beyond the beta launch hasn’t come through yet, a Facebook spokesman said.
For Reliance, whose debt pile swelled to more than $40 billion as of September, the partnership will bring in much needed funds to make good on its promise to cut net debt to zero by March 2021.
Reliance Industries, controlled by billionaire Mukesh Ambani, is also set to sell a fifth of its oil and chemical refining business to Saudi Aramco for roughly $15 billion, and a stake in its telecom tower assets to Canadian private equity firm Brookfield Asset Management for over $3 billon.
While Jio has become the country’s largest wireless operator within about three years of its launch, Mumbai-headquartered Reliance has also rapidly expanded its retail business, which now has over 10,000 stores selling groceries, consumer electronics and apparel.
Revenue at these two businesses together jumped more than 25 percent in the December quarter.
Last month, Financial Times reported that Facebook was in talks for a 10 percent stake in Jio but the talks were halted due to global travel bans amid the coronavirus outbreak.
Jio said Morgan Stanley was the financial adviser on the deal. AZB & Partners, and Davis Polk & Wardwell were counsels.
