Investors are piling billions into this Indian telecom operator for a slice of the country's booming digital economy

Key Points
  • Facebook invested $5.7 billion into Jio Platforms in exchange for a 9.9% stake last month. 
  • U.S. investors like Silver Lake and Vista have also made substantial bets on the company. 
  • Jio Platforms sits under Reliance Industries, which is owned by Indian business magnate Mukesh Ambani. 
Mukesh Ambani
Barcroft Inida | Getty Images

U.S. investors are piling billions into Indian telecom operator Jio Platforms as they look to capitalize on the country's booming digital economy. 

Jio Platforms, owned by billionaire Mukesh Ambani's Reliance Industries, announced in a statement on Friday that New York-headquartered private equity firm KKR is pledging $1.5 billion for a 2.32% stake in the company at a valuation of $65 billion. 

The announcement comes one month after Facebook said it was investing $5.7 billion in Jio Platforms in exchange for a 9.9% stake. It was Facebook's biggest deal since its $19 billion WhatsApp purchase. 

Elsewhere, Silicon Valley venture capital firm Silver Lake said it was investing $750 million 18 days ago, and Austin-headquartered private equity firm Vista said it was taking a $1.5 billion stake 14 days ago.

Jio Platforms is clearly the flavor of the month among leading U.S. tech investors. But why? Home to 1.35 billion people, India is quickly catching up with more technologically advanced nations and investors don't want to miss out on the opportunity that India presents. 

Jio Platforms operates the Jio Infocomm telecom network, which has amassed over 388 million 4G subscribers since launching in 2016. Today it is India's top telco and it also has several apps, and other services in e-commerce and broadband. 

"Jio offers mobile Internet for nearly free and tries to make money by up-selling subscriptions to their own versions of Spotify and Netflix," said Vishal Gulati, a venture capital investor at London firm Draper Esprit. 

Ambani, India's richest man, is in the process of trying to sell approximately 20% of Jio Platforms to raise cash for debt-ridden parent company Reliance Industries, which is heavily involved in oil and petrochemicals. It reportedly has a net debt pile of around $20 billion. 

Roughly $9 billion of equity in Jio Platforms has been sold to U.S. investors in the last few weeks. 

Saudi Arabia's sovereign wealth fund and Mubadala, the sovereign wealth fund of Abu Dhabi, are also considering taking large stakes of around $1.5 billion and $1.2 billion respectively, according to The Financial Times

"Few companies have the potential to transform a country's digital ecosystem in the way that Jio Platforms is doing in India, and potentially worldwide," said Henry Kravis, cofounder and co-CEO of KKR, in a statement. 

"Jio Platforms is a true homegrown next generation technology leader in India that is unmatched in its ability to deliver technology solutions and services to a country that is experiencing a digital revolution."