Jio Platforms IPO Reportedly Shifts To Fully Fresh Issue

Reliance Industries is reworking the structure of Jio's initial public offering (IPO) from an offer for sale to a fully fresh issue, after disagreements with existing investors over pricing made the original plan unworkable.

Under the original March plan, each of Jio's 14 equity investors would trim 8 to 8.5% of their holdings through an offer for sale, resulting in roughly 2.8% equity dilution with no full exits.

Under the revised structure, all proceeds flow directly to Jio Platforms rather than to selling shareholders, and existing investor stakes will dilute proportionally.

What Changed And Why

Existing shareholders, which include Google, Meta, Saudi Arabia's Public Investment Fund, KKR, Silver Lake, General Atlantic and several others, pushed for a higher price band to maximise returns on investments made in 2020. Reliance Industries, led by Mukesh Ambani, took the view that pricing the issue too aggressively risked a weak listing day performance that would hurt retail investors.

A very large offer at a high price band creates two problems simultaneously. First, the issue may be too large for markets to absorb and second, a high entry price leaves little room for post-listing gains for retail buyers.

The revised approach lets the market determine the price after listing. Private equity investors who want to exit can sell in the open market once trading begins rather than locking in returns through the IPO itself.

What The Money Will Be Used For

With a fresh issue, all proceeds go to the company. Around ₹25,000 crore is expected to be used for debt repayment, with remaining funds allocated based on business requirements.

The fresh issue structure at a more conservative valuation will also result in a scaling down of Jio's previously reported valuation range of $133 to $154 billion. Reliance's current 67% stake in Jio will face dilution under this structure, which the company is reportedly agreeable to.

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Timeline

The Jio IPO is expected to move a step closer, with the company likely to file its draft red herring prospectus with the Securities and Exchange Board of India within the next week or fortnight. The revised structure may push the listing timeline back by roughly a month to July, though that remains subject to change depending on market conditions.

Nineteen banks have been appointed to manage the issue, including Kotak Mahindra Capital, Morgan Stanley, Goldman Sachs, JM Financial, HSBC, Bank of America and Citigroup. The listing would mark the first public offering by a major Reliance unit in nearly two decades.

Sources:

Economic Times

Business Standard