Jio IPO: Reliance Considering To Offer Only New Shares, Without Selldowns By Existing Holders

Reliance Industries Ltd. is gearing up to offer only new shares in the initial public offering of Jio Platforms Ltd., without selldowns by existing holders, according to people familiar with the matter, reducing the risk of more international capital leaving India.

Jio's IPO may fetch as much as $4 billion, people familiar with the matter have said. That would make it the country's largest ever listing, more than the $3.3 billion Hyundai Motor India Ltd. raised. The company is aiming to file its listing paperwork this month, the people said, in an apparent delay on the back of a market downturn stemming from the Iran war.

A Reliance Industries representative did not immediately respond to a request for comment. The Economic Times first reported on the company's plan to offer entirely new shares.

A switch to a sale of fresh shares instead of an offer by existing shareholders would help avoid capital outflows at a time when the Indian government is growing increasingly concerned about capital flight. Foreign investors have sold Indian shares worth about $21.6 billion so far this year, after net outflows of nearly $19 billion in the previous year, according to data compiled by Bloomberg.

ALSO READ: Reliance Jio Q4 Results: Profit Up 2% Even As ARPU Stays Flat; Revenue Sees Modest Uptick

“If Reliance proceeds with a fully primary issuance, it could help limit the repatriation of funds and support India's capital account within the balance of payments,” said Madan Sabnavis, chief economist, at Bank of Baroda. “Such a structure would ensure that the proceeds are retained domestically, potentially easing pressure from ongoing foreign investor outflows.”

Prime Minister Narendra Modi on Sunday appealed to citizens to cut fuel use and limit foreign travel as rising oil prices from the Iran war threaten to widen the nation's import bill and strain foreign-exchange reserves. India is looking to stem an outflow of funds as it seeks to manage the country's strained foreign-exchange reserves.

Jio Platforms' investors include Meta Platforms Inc. and Alphabet Inc.'s Google, as well as sovereign wealth funds such as Saudi Arabia's Public Investment Fund, Mubadala Investment Co. and Abu Dhabi Investment Authority. Private equity backers include Vista Equity Partners, KKR & Co., General Atlantic and Silver Lake Management.

Jio's IPO would be the first by a major unit of billionaire Ambani's flagship conglomerate in almost two decades. The offering is gathering steam after the government approved a change in listing requirements, now allowing large issuers to dilute as little as 2.5% of their equity. Sizable IPOs in India have typically included sales of existing shares, like those of Hyundai Motor India and shadow lender Tata Capital Ltd.

The company, which controls India's largest wireless operator, is working with Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., JM Financial Ltd., Kotak Mahindra Capital Co. and Morgan Stanley on the offering, people familiar with the matter have said.