Facebook will spend $5.7 billion (£4.6 billion) for 10 percent of Reliance Industries’s digital business, as the social media firm looks to leverage its popular WhatsApp messenger to offer digital payment services to small grocers in India.
The deal will help Reliance cut debt that has piled up in its push to secure top spot for its Jio Infocomm telco, and help boost its new online grocery marketplace JioMart.
India‘s online grocery market is lucrative but competitive, with Amazon’s Pantry jostling for market share with Walmart’s Flipkart and BigBasket, backed by China’s Alibaba.
But a lot of untapped value lies in India‘s kirana stores, or small grocers, lifeblood of the country’s $375 billion grocery industry, according to data from the Retailers Association of India.
“In the near future JioMart … and WhatsApp will empower nearly 30 million small Indian kirana shops to digitally transact with every customer in their neighborhood,” Mukesh Ambani, Reliance’s billionaire CEO said in a video statement.
WhatsApp has 400 million users in India, its biggest market. It has been trying to secure approval to roll out its digital payment service in India, to compete with the likes of Google Pay.
“Both Jio and Facebook want to tap feature phone users; both have been trying to tap payments and both want to increase grassroots adoption,” said Tarun Pathak, associate director at Hong Kong-based Counterpoint Research.
A marriage of JioMart and WhatsApp services will help reach grassroots users in India who shop from small stores, he said.
Facebook’s investment will make it the largest minority shareholder in Jio Platforms, Jio said on Wednesday, putting the enterprise value of the business at about $66 billion.
Jio Platforms holds a host of Reliance’s digital assets including Jio Infocomm, which has become the country’s largest telco within about three years of its launch. It has roughly 370 million subscribers.
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