Billionaire Mukesh Ambani is understood to have started the process for the initial public offer of Reliance Industries’ telecom arm, Reliance Jio Infocomm, and sources estimated the size of the offer in the range of ₹35,000-40,000 crore.
The public offer will consist of an offer for sale component and a fresh issue with a pre-IPO placement, sources said. They added that the Reliance group was aiming for the issue to hit the market in the second half of the year and if it goes through as per schedule, it will be the largest IPO in India.
Pre-IPO placement
Preliminary talks have already started for a pre-IPO placement, the sources added. While the size of the issue will be large, there would be ample appetite for it, bankers said, adding that there should not be any difficulty getting subscriptions.
The amount of the pre-IPO placement will depend on the size of the fresh issue, investment bankers said. The split between OFS and the fresh issue is still being decided.
There was no response to emails sent to RIL for clarification on the proposed issuance.
The OFS component is likely to be significant as it would provide the opportunity for a partial or full exit for many of the investors in it. RJio is housed under Jio Platforms, in which foreign investors own about 33 per cent stake. RIL had sold stakes in it to a range of funds such as Abu Dhabi Investment Authority, KKR, Mubadala, and Silver Lake to raise close to $18 billion in 2020.
Valuation estimate
While various brokerages have estimated the valuation of RJio at around $100 billion, sources said that it is likely to be higher at around $120 billion as Jio Platforms is central to RIL’s investments in next-generation technologies, including retail.
Recently Jio Platforms announced its partnership with global technology giant Nvidia to collaborate on developing AI language models, with Ambani looking to disrupt the AI space with innovative solutions.
The tech push as well as the focus on AI is expected to give it a competitive edge over startups. RJio has also obtained regulatory approval to launch satellite internet services.
RIL has spent close to $3 billion over the last 5 years in acquisitions for its telecom, internet and digital businesses.
Reliance Jio is the largest telecom operator in the country with 460 million wireless subscribers at the end of October. Despite losing subscribers since it raised tariffs in June last year, it has maintained its lead. The hike in tariffs resulted in a big spike in its profitability in the September quarter and was seen as a part of its strategy to monetise its 5G services ahead of its listing.
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