|Sale of Jio Stake||Stake Sold||INR Amt||Implied Valuation|
|Silver Lakes - 2 Rounds||2.08%||10,203||4,90,529|
|General Atlantic Partners||1.34%||6,598||4,92,388|
As the table depicts, nine leading PE funds and sovereign funds have already invested in Jio Platforms at a total valuation of around $65 billion. Discussions are still on with other marquee names like the Saudi Sovereign Fund and Microsoft about a possible stake sale. Interestingly, it is not just about Jio Platforms. Amazon has reportedly expressed interest in Bharti Airtel and Google has shown interest in Vodafone Idea. The moral of the story appears to be a rush for Indian digital assets. What is driving this gold rush?
Demand for digital assets
Since March 24, Vodafone has given 205% returns. While that is more of a low price effect, what is more interesting is that RIL and Bharti have also shown sharp appreciation in a short span of time. Both the stocks are trading close to their all-time high levels and both feature in the top-5 in terms of market capitalization. This performance has been clearly driven by the focus on digital assets. But why are digital assets becoming so valuable?
Yes, digital assets are becoming a lot more valuable?
When Jio was launched, it was radical because it made calls free and slashed prices of data to new lows. Most other telecom players had to follow suit. What has then made digital valuable now?
• The COVID-19 may have come as a boost to digital in much the same way as demonetization offered a big boost to digital money. During the 3 months of lockdown, most companies had to shift to working from home. However, it was thanks to a combination of cheaper and reliable bandwidth offered by the telecom players that WFH became practically possible. That has two key ramifications.
• Post COVID-19, we could see a new model for the workplace. In the coming years, work places could become more collaborative and companies may look for an opportunity to reduce the capital that is locked up in real estate assets. The likes of Infosys and TCS are already looking at a hybrid workplace model, which could be more efficient.
• The new digital model could also change the way people interface. Travel could be largely replaced by videoconferences, AGMs could be replaced by virtual AGMs and even plant visits could be replaced by interactive virtual plant visits. These changes can open up a huge world of opportunity for digital property owners in India.
• If the market cap shift in the Reliance group is evaluated, the shift has largely happened due to the digital assets. Even the value created by retail is more due to the value that a digital platform can create. The traditional cash cows like refining and petchem are no longer adding much value to the group.
To sum it up, superior bandwidth and social distancing may have created the right recipe for the digital asset values to take off. To begin with, it is rerating the value of digital infrastructure providers. The show may have just begun!