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Reliance Industries to acquire majority stake in VC-backed Embibe

13 April, 2018

Reliance Industries Ltd (RIL) will invest $180 million (Rs 1,175 crore) in ed-tech startup Embibe, as India’s biggest private-sector company by revenue expands its bet on digital businesses after quickly ramping up its data-led telecom unit.

The energy-to-retail conglomerate said in a stock-exchange filing it will acquire a 72.69% stake in Bengaluru-based Embibe from existing investors including venture capital firms Kalaari Capital and Lightbox Ventures.

The planned investment will be spread over three years and includes the sum to be paid for acquiring the majority stake from Embibe’s existing investors, RIL said. It didn’t elaborate.

Email queries to Embibe and its venture capital backers Kalaari Capital and Lightbox Ventures, on exit amount and valuation, didn’t get a response till the time of publishing this report.

RIL, controlled by billionaire Mukesh Ambani, derives a majority of its revenue from its refining and petrochemicals business and also operates a large retail chain. It launched its Reliance Jio Infocomm Ltd unit in late 2016 and threw the telecom industry in turmoil with cut-throat data tariffs.

RIL has, of late, sharpened its focus on media content and data-driven businesses that gel with its telecom arm. Last month, RIL said it would merge music streaming service JioMusic with rival Saavn and that the combined entity would be valued at $1 billion (Rs 6,500 crore). RIL will also invest around $100 million to expand the platform.

In a related development, RIL’s retail unit last month picked up a 16% stake in a US-based firm that provides operating system for its internet-enabled mobile handset JioPhone.

The deal for Embibe has potential synergies with RIL’s digital services initiatives and investments. “RIL aims to connect over 1.9 million schools and 58,000 universities across India with technology,” said Akash Ambani, director at Reliance Jio.

Embibe’s founder, investors
The startup, operated by Indiavidual Learning Pvt. Ltd, was set up in 2012 by Aditi Avasthi. An MBA from Chicago Booth School of Business, Avasthi has had stints at Bain & Company and Barclays.

Embibe will use the capital over the next three years towards deepening its research and development on artificial intelligence in education, as well as business growth and geographic expansion, RIL said. Avasthi, who is also the startup’s chief executive, will continue in her role and drive the growth of the business, RIL added.

“With artificial intelligence focused on content intelligence and automation as well as behavioural recommendations and student intelligence, our products have redefined the way ed-tech can impact the lives of students and teachers,” Avasthi said.

The company was first backed by Sandeep Murthy, who was earlier leading the India investments of Silicon Valley VC firms Kleiner Perkins Caufield & Byers and Sherpalo Ventures. Murthy, along with his partners, launched Lightbox.

In May 2014, Embibe raised $4 million from Kalaari and Lightbox. In March 2017, Embibe raised an undisclosed amount from Lightbox in a round that valued the startup at $19.4 million (Rs 137 crore), or Rs 381 per share. Previously, during the Series A round, Embibe was valued at $9 million, or Rs 176 per share, according to VCCEdge, the data research platform of News Corp VCCircle.

For the deal with Embibe, Citibank acted as the financial adviser to RIL. AZB & Partners, Covington & Burling LLP and KPMG acted as legal advisers and PricewaterhouseCoopers provided tax advisory and due-diligence services to RIL.

Embibe was advised by Arpwood Capital, and law firms Shardul Amarchand Mangaldas & Partners and Khaitan & Company. Deloitte Touché Tohmatsu Limited provided tax advisory services.

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Reliance Industries to acquire majority stake in VC-backed Embibe

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