Reliance Jio files RHP, announces IPO dates for India's biggest listing

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ETMarkets.com

Jio IPO is expected to comprise only a fresh issue, without an offer-for-sale component

Reservation for RIL shareholders

The offer also includes a sizeable reservation for Reliance Industries shareholders. Up to Rs 2,500 crore worth of shares will be reserved for eligible Reliance Industries shareholders, giving existing RIL investors a direct route to apply for shares in Jio Platforms. Up to Rs 500 crore worth of shares will also be reserved for eligible employees.

The record date for the reservation for RIL shareholders is the date of filing of RHP, which is October 14.

The shareholder reservation is one of the most closely watched parts of the issue because Jio Platforms is currently housed inside Reliance Industries. Investors in RIL have long expected the listing of Jio to unlock value in the conglomerate, whose businesses span telecom and digital services, retail, oil-to-chemicals and new energy.

Reliance Jio IPO details

The Jio IPO is a entirely fresh issue, with no offer-for-sale by existing shareholders. That means Reliance Industries and Jio’s strategic investors, including Meta, Google, Mubadala and Saudi Arabia’s Public Investment Fund, are not expected to sell shares in the offer. The proceeds will go to Jio Platforms.

ETMarkets earlier reported that some existing backers likely to increase their exposure to Jio Platforms in the IPO. Meta affiliate Jaadhu Holdings is the largest external investor, with a 9.98% stake, followed by Google International with 7.73%.

The draft papers showed that up to Rs 27,500 crore of the net proceeds will be used to repay or prepay borrowings, mainly linked to Reliance Jio Infocomm, with the balance for general corporate purposes. Jio Platforms houses Reliance’s telecom and digital businesses, including mobile services, fixed broadband, cloud, entertainment, enterprise technology and AI offerings. The company had nearly 52.4 crore subscribers as of March.

Jio IPO has already drawn more than $20 billion in bids from prospective investors, according to reports. Global investors including Fidelity, Allianz and Capital Group, along with other international and domestic institutions, are said to have indicated interest in the offering.

Reliance Jio IPO GMP

Grey market interest has already heated up ahead of the filing. Jio shares were trading at a premium of about Rs 218, or 19%, implying a price of Rs 1,337 per share, based on the presumption that the upper end of the IPO price band would be Rs 1,119.

Jio is being positioned as more than a telecom company, with its businesses spanning mobile services, fixed broadband, cloud, entertainment, enterprise technology and artificial intelligence offerings.

Impact on RIL shares

For Reliance Industries, the IPO could create an independent market price for its most valuable growth business. A listed Jio would allow investors to value the digital platform separately instead of only through Reliance’s conglomerate structure, which also includes oil-to-chemicals, retail and new energy.

However, the impact on RIL shares will depend on the final valuation, subscription demand, listing performance and whether investors believe the IPO can reduce Reliance’s holding-company discount. Analysts have said a small public float may limit immediate value unlocking because Reliance will continue to own the majority of Jio even after the listing.

Disclosure: This article has been written by Podishetti Akash, who is not a SEBI-registered Research Analyst or an Investment Adviser. Podishetti Akash and his ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclosures here.