Mukesh Ambani-led Reliance Industries and Facebook are exploring the potential of creating a multipurpose app, much like Chinese superapp WeChat, by leveraging the WhatsApp platform and consumer base, mentioned 4 folks conversant in the matter. The two would usher in funding, technical knowhow and area experience for the undertaking, they mentioned.As per the continued discussions, which have been delayed because of the Covid-19 pandemic, the concept is to create an app that isn’t simply a communication platform however one the place customers would additionally have the ability to purchase groceries via Reliance Retail shops, or store at ajio.com, or make funds utilizing JioCash.
The plan is to create a super-app on the traces of WeChat, which mixes digital funds, social media, gaming in addition to flight and resort bookings, amongst different options. Such an app would offer RIL a two-fold profit — present B2C engagement for its shopper companies, and supply the group insights on customers’ spending habits.
Commercial Due Diligence On
Commercial due diligence for the undertaking is presently on. Morgan Stanley has been appointed the funding banker.An emailed questionnaire to Reliance didn’t elicit any response as of press time Wednesday. Facebook refused to remark. “The negotiations are being compartmentalised. So, someone working on the commercial side wouldn’t know what’s happening on the technology or the financial aspects of the deal,” mentioned a particular person with direct information of the matter.
“This is going to be a defining partnership, and it’s not just a financial investment. The deal is about creating value and a business that would differentiate both Facebook and Reliance,” mentioned one other particular person.
Final construction not clear
All the folks ET spoke to mentioned the scenario is fluid, and that it’s nonetheless unclear how the ultimate construction would appear like. “A new company could be created – where both the players could invest; or Facebook could invest in Reliance Jio and Reliance Retail, and that is the way the partnership could be formed for the new venture,” mentioned one other one that is a part of a workforce engaged on the deal.
He added that each the businesses have employed prime consultants and attorneys based mostly within the US to discover all features — from authorized points to taxation. Financial Times had reported on March 24 that Facebook is eyeing a multibillion-greenback stake in Reliance Jio. The report mentioned Facebook could pick up 10% in Reliance Jio for “billions of dollars”.
“There is going to be a collaboration, but it’s not clear how the companies will come together since a lot would depend on commercial viability and the technical knowhow both the players would bring in,” mentioned a third particular person.
People near the event additionally hinted that the deal might take longer because of the Covid-19 pandemic. “The priority for Reliance Retail right now is to keep stores running so that consumers get supplies. Also, there are travel restrictions right now, which create problems,” he mentioned.
The govt mentioned Reliance Industries has publicly mentioned the corporate was trying to elevate cash for Reliance Jio and Reliance Retail. “It doesn’t matter whether the money comes from one investor or another,” he added. The FT report had mentioned that Google too was in talks with Reliance Industries.