Google joins the dash for India's Jio with $4.5 billion investment

Hong Kong(CNN Business) Asia's richest man is getting another massive investment from Silicon Valley as he grows his technology empire in India.

Google (GOOGL) will pump $4.5 billion into Mukesh Ambani's Jio Platforms, the digital technology arm of sprawling conglomerate Reliance Industries. That gives Google a 7.7% stake in the company, the companies announced Wednesday.

The investment includes a deal to jointly develop an entry level, affordable smartphone and "expand the benefits of digitization across the length and breadth of India," they said. The deal values Jio at about $58 billion.

Jio Platforms includes India's biggest mobile network with more than 388 million subscribers. Jio also has an ecosystem of apps, offering smartphone users everything from online grocery shopping to digital payments and video streaming.

The company has been on a frenetic fundraising spree in recent months. Including the Google investment, Jio has amassed roughly $20 billion since April from investors including Qualcomm (QCOM), Intel (INTC), KKR, Silver Lake, Vista and Mubadala, Abu Dhabi's sovereign wealth fund. Facebook (FB) invested $5.7 billion for a 9.99% stake.

Wednesday's announcement comes two days after Google CEO Sundar Pichai announced plans to invest $10 billion in India with the aim of making the internet "affordable and useful" for a billion people.

It was not immediately clear whether Google's investment in Jio Platforms was part of that total, but the Silicon Valley firm said earlier this week that its investment would involve equity investments, partnerships, and spending on infrastructure over the next five to seven years.

India is the world's fastest growing internet market, with almost 700 million internet users and nearly as many yet to come online for the first time. The country has attracted billions of dollars of investment over the last 15 years not only from Google and Facebook, but also from Amazon (AMZN), Netflix (NFLX), and Twitter (TWTR), which rushed to cash in on the internet boom.

The numbers suggest there is still huge potential for growth, despite red flags raised recently by government efforts to exert more control online and India's economic slump. Google's plans, along with Ambani's fundraising spree, show investors are ready to commit even more.

China dominates India's smartphone market and tech giants Alibaba (BABA) and Tencent (TCEHY) are major investors in some of the country's most valuable startups. But tension has been rising between the close trading partners and neighbors, and India last month banned several Chinese apps, including TikTok, claiming they pose a threat to national security.

— Sherisse Pham and Hanna Ziady contributed to this report.