Reliance Jio gears up for record-breaking IPO

Mumbai-based Reliance Jio Infocomm appears poised for a monumental initial public offering (IPO), following a series of strategic maneuvers that include raising mobile tariffs and monetizing its 5G services. Analysts predict that this IPO could be the largest in India’s history, potentially taking place as early as the start of the next fiscal year. 

Jio recently announced a tariff hike, raising the prices of its prepaid plans by up to 25%. This was followed by Airtel and Vi also announcing price increases. 

Anticipation is high within the industry, with insiders expecting detailed announcements about Jio’s significant IPO at the annual general meeting (AGM) of its parent company, Reliance Industries Ltd. (RIL), scheduled for next month. This was reported by Kalyan Parbat in the Economic Times. 

One key indicator of Jio’s performance, the average revenue per user), is expected to rise thanks to the recent tariff increases and revenue from its burgeoning 5G business. This enhancement in financial metrics is likely to attract more investors ahead of the share sale. 

Jio is valued at approximately $133 billion (Rs 11.11 lakh crore). The anticipated share sale could be worth Rs 55,500 crore, setting a new record for India’s largest IPO. Current regulations mandate that companies with a valuation of Rs 1 lakh crore or more must sell at least a 5% stake in their IPO. 

Under the leadership of Mukesh Ambani, Reliance Industries Limited holds a 67.03% stake in Jio Platforms Ltd. (JPL), which encompasses Reliance’s digital and telecom assets, with the telecom sector comprising the majority of JPL’s business. The remaining 32.97% of JPL is owned by strategic investors such as Meta and Google, which hold 17.72%, and various global private equity investors, including Vista Equity Partners, KKR, PIF, Silver Lake, L Catterton, General Atlantic, and TPG, who collectively own 15.25%. These international investors invested over Rs 1.52 lakh crore in JPL in 2020. 

Given the usual four-year holding period for private equity investors, analysts speculate that these firms might consider exiting their investment through the IPO. 

Jio’s timing for the IPO appears strategic, with its financial outlook bolstered by recent tariff hikes and the potential for further price increases in the coming year. Jio’s earnings and revenue will grow at a compound annual growth rate of 18–26% between FY24 and FY27.