Job losses continue to mount across startup ecosystem
Small startups and well-funded unicorns in various sectors such as online food delivery, hospitality and tourism, and mobility, are downsizing or streamlining operations to cut costs as demand remains muted due to the coronavirus outbreak and the ensuing lockdown to contain its spread.
Several startups laid off or furloughed employees and contract staff in April and May, besides imposing salary cuts to save cash, with revenues taking a hit. Travel and hospitality startups have been hit the most. Bengalurubased travel startup Flynote has laid off most of its 130-strong workforce citing fund shortage.
Hospitality unicorn Oyo, which has been laying off people since late 2019, announced salary cuts, besides furloughing staff in late April, to save cash after its revenues plunged. Foodtech startup Dineout and online real estate platform Magicbricks have cut employee count across business roles, said three people aware of the development. Some employees of Magicbricks were asked to resign in writing without severance pay and also serve a 30-day notice period, said a person, requesting anonymity.
Reliance Industries Ltd (RIL) on Sunday said New Yorkbased private equity giant General Atlantic will invest ₹6,598.38 crore in its digital assets subsidiary, Jio Platforms Ltd.
The deal, which comes just two days ahead of the launch of RIL’S ₹53,000-crore rights issue, will see General Atlantic pick up a 1.34% stake in Jio Platforms, valuing the company at ₹4.91 lakh crore. With the latest deal, Jio Platforms has raised ₹67,194.75 crore from marquee tech investors, such as Facebook, Silver Lake, Vista Equity Partners and General Atlantic, in less than a month.
RIL said the deal with General Atlantic gives Jio an enterprise value of ₹5.16 lakh crore.
On May 11, had reported that the PE firm could invest around ₹10,000 crore to buy a 2% stake in Jio Platforms.
“I am thrilled to welcome General Atlantic, a marquee global investor, as a valued partner. I have known General Atlantic for several decades and greatly admired it for its belief in India’s huge growth potential,” said Mukesh Ambani, chairman and managing director, RIL. “General Atlantic shares our vision of a digital society for India and strongly believes in the transformative power of digitisation in enriching the lives of 1.3 billion Indians. We are excited to leverage General Atlantic’s proven expertise and strategic insights across 40 years of technology investing for the benefit of Jio.”
Market experts said RIL’S strategy to raise funds through a flurry of stake sales is primarily aimed at building confidence among potential investors for its mega rights issue amid a volatile equity market.
On April 30, RIL said it will raise ₹53,125 crore through a 1:15 rights issue (one new share for every 15 shares held) at an offer price of ₹1,257 apiece. The issue is set to open on May 20.
Due to the uncertainties, RIL will allow subscribers to buy the rights issue shares by only making a part payment now and the rest later. This will buy RIL promoters more time to bring in enough money to fully subscribe to the rights issue. Shareholders willing to subscribe to the rights issue will have to pay 25% on application and the rest in one or more tranches.