Over the last 24 months there have been many divestitures from Indian companies — old economy and new economy alike — and in most cases the timing could not have been better. Reason: Investors are flush with dry powder. But, there was, and continues to be, a sense of missed opportunity.

“There was a sense of ‘we won’t miss the China internet tech opportunity when it presents itself in India,” says Vivek Pandit, Senior Partner, and global co-leader of McKinsey & Company’s Private Equity and Principal Investment group. A reason why he also believes that Jio Platforms’ eye-popping fund raise last year was “effectively a levered play on India’s digital future.”

Last year, Mukesh Ambani-led Reliance Industries (RIL) raised $20 billion for its digital services arm, Jio Platforms, in the months during the nation-wide lockdown. Its retail business, Reliance Retail Ventures Limited, then went on to raise a staggering $6 billion in growth capital. Looking back on the Jio fund raise, Pandit, in an exclusive interaction with Fortune India, says, “It’s (Jio’s) ability to operate with required flexibility in a regulated environment was attractive to investors. You had a single play across multiple potential digital domains.”

“If you think about the investors they [RIL] brought in, including strategics like Facebook and Google, blue chips alternative investors like TPG, KKR and SilverLake and long-term Middle East sovereigns like ADIA and PIF,” says Pandit, it’s a “terrific balance of investors that not only lend credibility and heft, they are also long on India as an investment destination.”

So when a company like Jio Platforms divests even minority stakes, there is short and a long-term value created. Jio, he adds, was able to raise needed cash at attractive valuations, and find buyers who understood the long-term value thesis. “Understanding investor demand and their own need to retire debt was key,” says Pandit.

Moreover, the promoters (Mukesh Ambani), he says, understood that several of these strategics and classic private equity funds missed the China tech opportunity for different reasons. “Emerging market digital leapfrog opportunities - the Tencents, the Alibabas,” points out Pandit. “He (Mukesh Ambani) likely understood that funds did not want to miss the India opportunity.” Interestingly, there were as many as seven common investors between RIL’s digital and retail services businesses, a clear indication that the RIL ecosystem is well and truly ready for a retail juggernaut—both online and offline.

McKinsey & Company

Why Jio got massive funding despite Covid lockdown