On Monday, Jio Platforms Ltd tapped into record institutional demand when it allocated shares worth ₹8,110 crore in its initial public offer to anchor investors among top names in the global finance. Next, India’s biggest telecom operator by subscribers is aiming at retail investors who will buy into its share sale, potentially the largest IPO in India.
The ₹10,500 crore retail portion of the offer opens for subscription on Wednesday and closes on Friday. Financial institutions and brokerages are stepping up efforts to draw retail investors into the ₹30,213-crore IPO, as syndicate bankers aim for strong retail demand and a successful listing.
“Platforms have been asked to focus their outreach on active as well as inactive trading accounts to build retail volume,” said a person familiar with the matter, who asked not to be identified because the details are private. “The effort aims to sustain retail buying interest through the listing date.”The push comes at a time when the broader Indian market is gripped by negative sentiment, with the benchmark Nifty 50 down more than 10% this year, making it one of Asia’s worst-performing indexes.“Considering the size of the book and the lacklustre market conditions, good retail participation will be important to ensure a listing pop,” said a person involved in syndicating the offer.
Investors such as Life Insurance Corp. of India, BlackRock Inc., Fidelity Management & Research, Capital Group and Allianz SE, besides sovereign wealth funds, including the Abu Dhabi Investment Authority, the Government of Singapore, the Qatar Investment Authority and Norges Bank Investment Management have taken anchor positions in the offer, a stock exchange filing by Jio Platforms showed.
Active marketingBrokerages and non-banking financial companies, including SBI Securities Ltd and Jio Financial Services Ltd, are advertising short-term loans to investors through apps and text messages to help them participate in the IPO. Mint reviewed a text message from HDFC Securities Ltd to a retail investor with an inactive trading account, encouraging the client to participate in the IPO.
“Hey there, we tried calling you about the Jio IPO,” the message read. “Your trading account is inactive. Reactivate now and stay investment-ready,” it added. The message did not indicate that the platform was offering loans specifically to finance applications for Jio shares.
Mint also reviewed banner advertisements by Axis Direct urging prospective investors to ensure they have active accounts to invest in the IPO. On 16 October, Bloomberg reported that Reliance Industries had released employee salaries 15 days ahead of schedule to encourage participation in the offer.
The report also said the company had reached out to most of its 420,000 employees across group firms, asking them to participate in the IPO. Emails sent to spokespersons for Reliance Industries and Jio Platforms did not elicit responses by press time.
Margin fundingInstitutions are offering margin funding covering 60% to 90% of the total application value, according to terms reviewed by Mint. Loan tenures range from 15 to 90 days, with allotted shares held by lenders as collateral until the loans are fully repaid.
Short-term IPO financing is an established practice in India’s capital markets. Investors regularly use margin funding from non-banks and brokerages to increase their bidding capacity and the amount they can apply for. While IPO financing is a standard offering across financial institutions, targeted advertising campaigns promoting credit are rare; historically, brokerages have marketed general-purpose leveraged trading accounts.
Neither India’s markets regulator nor its banking regulator has rules against such offers. “IPO financing has been offered around earlier large public issues; the current concern is the scale and direct marketing of leverage around one issuer,” said Alay Razvi, managing partner at law firm Accord Juris.
Valuation is keyWeak retail demand can weigh on listing-day gains even when an issue is oversubscribed overall, which makes broad retail participation important for an issuer through its debut. Two years ago, the biggest issuer of fresh equity until then, Hyundai Motor India saw its shares wilt at debut.
Hyundai, India’s largest IPO in dollar terms to date, ended its first day of trading on 22 October 2024 about 7% below its issue price. Its $3.3 billion offering was subscribed 2.37 times overall, driven largely by qualified institutional buyers, while retail investors took up only about half of their allotted portion.
Retail appetite remains strong for Jio Platforms shares going by a ₹243 grey market premium, about 22% above the upper issue price of ₹1,119, according to data from InvestorGain, signalling expectations of listing gains. Jio Platforms’ market-leading subscriber base, faster revenue growth than rivals and expanding broadband business strengthen its investment case.
The challenge, however, is to convert that scale into higher customer spending and better returns on capital. Jio’s average revenue per user remains below Bharti Airtel’s, while its return on capital employed has declined. At the proposed valuation, investors must weigh its growth potential against the premium they are being asked to pay, Mint reported on Tuesday, citing analysts.
Emkay Global Financial Services values Jio at 15.6 times its FY26 enterprise value-to-Ebitda and recommends subscribing to the IPO. Centrum Broking values Jio’s equity at ₹11.5 trillion, using an enterprise value-to-Ebitda multiple of 12 times estimated FY28 Ebitda.
By comparison, Bharti Airtel, whose operations includes a business in Africa and the Indus Tower unit, trades at 8.59 times its estimated FY28 Ebitda, according to Bloomberg data.