RIL to beef up JioMusic through Saavn investment, merged company to be valued at $1 billion

NEW DELHI: Reliance Industries has signed a pact to buy out Saavn music app for $104 million in cash and rest in stock, to merge it with its own digital music service JioMusic, valuing the combined music platform at about $1 billion.

Separately, the Reliance Jio board Friday approved raising Rs20,000 crore in debt for capex needs.

In the cash and stock deal for Saavn, the Mukesh Ambani owned company will hold roughly three-fourths of the merged entity, with JioMusic’s implied valuation at $670 million, RIL said in a statement issued Friday evening.


In addition to the merger, Reliance will also invest up to Rupee equivalent of $100 million for growth and expansion of the platform into one of the largest streaming services in the world. Of this, Rupee equivalent of $20 million will be invested upfront.

“The investment and combination of our music assets with Saavn underlines our commitment to further boost the digital ecosystem and provide unlimited digital entertainment services to consumers over a strong uninterrupted network,” said Akash Ambani, Director, Reliance Jio, who is said to have driven the deal.

“We are delighted to announce this partnership with Saavn, and believe that their highly experienced management team will be instrumental in expanding Jio-Saavn to an extensive user base, thereby strengthening our leadership position in the Indian streaming market,” he added.

The transaction is subject to customary closing conditions.

The company is acquiring partial stake from the existing shareholders of Saavn, including Tiger Global Management, Liberty Media and Bertelsmann among others. The three co-founders of Saavn, Rishi Malhotra, Paramdeep Singh and Vinodh Bhat, will continue in their leadership roles and will drive growth of the combined entity.

The move comes at a time when RIL rivals in the telecom space, led by market leader Bharti Airtel, are beefing up their entertainment content organically, or inorganically, even as they follow the aggregator model. JioMusic, which has 16 million HD songs sourced from all major Indian and international labels, will become the first among peers to have taken the big step to undertake a merger with another content provider.

“Content is increasingly becoming an important piece of a telco’s overall data strategy. And the acquisition of Saavn music app, will help Jio broad-base its data offerings packing in more value, which should help it target high-value customers from rival incumbents,” said Naveen Kulkarni of PhillipCapital.