In a market scenario where businesses are still struggling to recover from the pandemic blow, Digital business is going great guns. There appears to be an insatiable demand for Digital India.
Reliance sets the trend
There appears to be endless appetite for Jio Platforms in the global PE space. Till the beginning of the week, RIL had sold a 17.5% stake in Jio Platforms for total value of Rs.78,500 crore. During this week, the Abu Dhabi sovereign fund, Mubadala, and Silver Lakes lapped up another 2.5% taking the monetization of Jio to 20%. Interestingly, the entire monetization has happened in less than 2 months and has set the ball rolling in finding a ready global market for the Indian digital ecosystem. Jio Platforms has certainly set the valuation paradigm.
Why is digital interesting
The global PE funds see a trillion dollar opportunity in the digital shift. Indian consumers have shown a propensity to adapt better and faster to digital shifts. From demat to online trading to ecommerce and apps; Indian consumers adapted to digital with a vengeance. Digital ecosystems like Jio and a continuous improvement in bandwidth helped this digital shift. PE funds now believe that as digital business explodes in India, the opportunity for a bigger wallet share of each digital customer opens up a trillion dollar market.
Bharti and Vodafone catch up
If Jio has taken the lead in monetizing digital properties, Bharti and Vodafone Idea cannot be far behind. Amazon wants to take a 5% stake in Bharti Airtel for $2.1 billion. In valuation terms it is still small compared to what Jio has been getting, but at least the ball has been set rolling. Even Vodafone Idea, despite the AGR related problems, is attracting a lot of interest from global technology giants like Google. It may be recollected that Google had missed out on the Jio bandwagon on valuation issues. Hence, Google has been looking at taking a 5% stake in Vodafone Idea to set the tone for its digital journey. These are not yet confirmed but such deals could make the space hotter.
Say thanks to COVID-19
If there was one event that triggered awareness about the power of digital; it was COVID-19. Despite the lockdown and the health concerns, a combination of smart connectivity, cloud computing, decentralized data networks and high quality bandwidth ensured that in most cases; work continued as usual. The work from home (WFH) push in the last few months has suddenly put digital at the centre of work. This applies to India and also to most parts of the world. COVID-19 has underlined the India digital opportunity and now no large tech player or PE fund wants to miss out on that. More power to the telcos!