Understanding Mukesh Ambani's Strategic Move: Selling Shares to Facebook

As a seasoned SEO expert, it's essential to dissect the intricate business strategies of influential figures like Mukesh Ambani. The decision to sell shares to Facebook was one of Ambani's strategic moves that played a pivotal role in the ongoing success of Jio and Reliance Industries.

Building the Base

Well, we all know Ambani Ji is an amazing businessman, and for people like us, it takes a long time to understand his strategies. Even the launch of Jio was based on a deep strategy: offering 4G Data and Unlimited Calling for free for almost three months, a move that initially left many shocked and questioning its viability. Nevertheless, Mota Bhai proved everyone wrong with its success.

Current Situation

Today, Jio boasts an impressive user base of 376 million, with Airtel at 142 million, and Vodafone-Idea at 117 million. The move to sell shares to Facebook, therefore, was not just a random action but a strategic one with multiple layers of benefit.

Jio-Facebook Deal

1. To Save Reliance from a Crash in the Stock Market

This deal was done as stock markets were crashing due to the lockdown and the coronavirus pandemic. Reliance’s shares were trading around 1500 before the crash and fell to 875. The crude oil crash also added to the financial woes of the company. Mukesh Ambani took quick actions and signed the Jio-Facebook deal immediately, saving the company from a potential crash. This deal not only restored shareholder trust but also helped the stock prices shoot up.

2. Addressing Existing Debt on Reliance

Before the deal, Reliance had massive debt. Facebook provided a significant amount of funding to help relieve this debt, making the company more financially stable to navigate through a recession. Additionally, Mukesh Ambani had promised to make Reliance debt-free by March 2021, and this deal was a crucial step towards fulfilling that promise.

3. Ensuring Trust in Business

Reliance needed a substantial amount of capital to clear its debt, and their primary source would have been foreign investors. However, due to the lockdown, foreign investors were hesitant to invest in Jio. Facebook's investment in Jio instantiated trust in foreign investors, leading to more investments and funding for Reliance. This boost in foreign investment was further amplified by Facebook’s commitment, eventually leading to a successful rights issue in India.

4. Attracting Indian Public Investment

After concluding deals with foreign investors, Reliance announced a rights issue to the general public. This move was a huge success, attracting millions of Indian investors, resulting in the largest rights issue in India's history during a global health crisis and recession.

Final Result

Reliance became debt-free before the promised date. Even after paying off these debts, Reliance now has a substantial amount of reserved cash for future plans. Mukesh Ambani is now the 4th richest person in the world, a testament to the success of this strategic move. Reliance gained international trust, paving the way for a possible IPO in the US stock market on NASDAQ. Reliance's share price/market cap increased by 150% in the last 2-2.5 months, reflecting the stock’s strong performance.

I hope you enjoyed this long read and gained valuable insights into business strategies, especially those employed by Mota Bhai. Please UPVOTE if you found the content helpful to help more people learn from these lessons.

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