Reliance Industries (RIL) is likely to remain in focus in Monday’s trade after its telecom and digital services arm, Jio Platforms, received SEBI’s final observations for its proposed initial public offering on August 28. The proposed issue could raise around Rs 37,700 crore, or about $3.8 billion, potentially making it the largest IPO in India.

The development is significant for RIL because the parent company owns about 66.43% of Jio Platforms. The proposed IPO will comprise up to 27 crore fresh equity shares, equivalent to around 2.9% of Jio Platforms’ post-issue equity base. There is no offer-for-sale component, meaning the proceeds from the issue will go to Jio Platforms rather than existing shareholders.

Jio Platform IPO puts a value on RIL’s largest operating assets

The IPO will give Jio Platforms a separately traded valuation, providing the stock market with a direct reference point for RIL’s telecom and digital businesses.

The proposed issue is expected to value Jio Platforms at around $137 billion, according to reports citing people familiar with the matter. The final valuation, however, will depend on the issue price decided through the book-building process.

Jio Platforms houses Reliance’s telecom and digital businesses. Reliance Jio Infocomm had more than 53.3 crore subscribers as of June-end, making it the world’s second-largest mobile operator by subscriber count, according to company data. Jio has also expanded into cloud, artificial intelligence and enterprise network services.

Jio Platforms: Rs 27,500 crore debt repayment a key part

Jio Platforms plans to use most of the IPO proceeds to repay or prepay borrowings of Reliance Jio Infocomm.

According to the draft prospectus, around Rs 27,500 crore of outstanding borrowings are proposed to be repaid or prepaid, with the balance earmarked for general corporate purposes.

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RIL currently owns about 66.4% of Jio Platforms, while Meta and Google together hold about 17.7%. Meta invested Rs 43,574 crore for a 9.99% stake in 2020, while Google invested Rs 33,737 crore for a 7.73% holding.

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Jio IPO: RIL stake becomes the key valuation link

For RIL shareholders, the next important disclosures will be the IPO price band, issue dates and final valuation. Those numbers will determine the market value assigned to Jio Platforms when it becomes a listed company and, consequently, the value attributed to RIL’s 66.43% holding.

The Jio IPO will also be the first public offering from the Reliance group since 2008. RIL Chairman Mukesh Ambani has described the Jio listing as an important value-creation milestone for the group.

RIL shares in spotligt

For RIL shares, Monday’s focus is therefore likely to centre on the regulatory clearance for Jio’s IPO and what the eventual public-market valuation of Jio Platforms could mean for the parent company’s stake. The IPO has received SEBI’s final observations, but the price band and listing schedule are yet to be announced.