India's largest IPO: Is Reliance Jio preparing for market debut?
Reliance Jio, India's leading telecom company, is reportedly preparing for a potential Initial Public Offering (IPO) as early as next year. This speculation comes in the wake of the firm's recent moves to increase mobile tariffs and monetize its 5G business. "The stage is now set for the telecom market leader's much awaited IPO in the near future," said Mayuresh Joshi, head of equity research at Indian unit of US-based William O' Neil & Co.
Jio's tariff hikes and 5G monetisation to boost ARPU
Analysts predict that the recent tariff hikes and revenue from the 5G business will significantly boost Jio's average revenue per user (ARPU), a crucial performance metric for telecom firms. This increase in ARPU is expected to make Jio more appealing to potential investors ahead of a share sale. "Rising focus on monetization could be a precursor to its imminent listing," stated brokerage firm Jefferies. Notably, Jio's ARPU had been stagnant at ₹181.7 for three quarters until March 2024.
Jio's potential IPO could be India's largest
Following its recent strategic moves, Jio is currently valued at approximately $133 billion (₹11.11 lakh-crore), according to Jefferies. If this valuation holds, a Jio IPO could become the largest in India's history. As per current rules, companies with a valuation of ₹1 lakh crore or more are required to sell at least a 5% stake in the IPO, which means Jio's share sale could be worth ₹55,500 crore based on the current valuation assigned by Jefferies.
Stakeholders in Jio Platforms ahead of potential IPO
Reliance Industries Ltd (RIL), led by Mukesh Ambani, holds a 67.03% stake in Jio Platforms Ltd, which encompasses Reliance's telecom and digital properties. The remaining 32.97% is held by strategic investors Meta and Google (17.72%), and global PE investors including Vista Equity Partners, KKR, PIF, Silver Lake, L Catterton, General Atlantic and TPG (15.25%). Analysts suggest that these PE firms may consider exiting their investment via an IPO.
