Reliance Industries, Facebook weigh creating a super-app

Mumbai: Mukesh Ambani-led Reliance Industries and Facebook are exploring the possibility of creating a multipurpose app, similar to Chinese super-app WeChat, by leveraging the WhatsApp platform and user base, said four people familiar with the matter. The two would bring in funding, technical knowhow and domain expertise for the project, they said.

As per the ongoing discussions, which have been delayed due to the Covid-19 pandemic, the idea is to create an app that is not just a communication platform but one where users would also be able to buy groceries through Reliance Retail stores, or shop at ajio.com, or make payments using JioMoney.

The plan is to create a super-app on the lines of WeChat, which combines digital payments, social media, gaming as well as flight and hotel bookings, among other features. Such an app would provide RIL a two-fold benefit — provide B2C engagement for its consumer businesses, and provide the group insights on users’ spending habits.


COMMERCIAL DUE DILIGENCE ON
Commercial due diligence for the project is currently on. Morgan Stanley has been appointed the investment banker.

An emailed questionnaire to Reliance did not elicit any response as of press time Wednesday. Facebook refused to comment.

“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,” said a person with direct knowledge 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,” said another person.

FINAL STRUCTURE NOT CLEAR
All the people ET spoke to said the situation is fluid, and that it is still unclear how the final structure would look 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,” said another person who is part of a team working on the deal.

He added that both the companies have hired top consultants and lawyers based in the US to explore all aspects — from legal issues to taxation.

Financial Times had reported on March 24 that Facebook is eyeing a multibillion-dollar stake in Reliance Jio. The report said 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,” said a third person.

COVID DELAYS
People close to the development also hinted that the deal may take longer due to 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 said.

The executive said Reliance Industries has publicly said the company was looking to raise money for Reliance Jio and Reliance Retail. “It doesn’t matter whether the money comes from one investor or another,” he added.