Blog

Each company is likely to raise $6.5 Bn to $10 Bn in the market debut assuming dilution of at least 10% of the holdings by the promoters: Report

The announcement is likely to be made public at the upcoming Annual General Meeting of RIL later this year: Sources

RIL mulling both Indian and global listing for the two companies. Jio may even be listed in the US on the Nasdaq stock exchange: Sources

Mukesh Ambani-led Reliance Industries is gearing up for the mega Initial Public Offering (IPO) of two its prized jewels — Reliance Retail and Jio.

According to a report in The Hindu Business Line, each company is likely to raise somewhere between $6.5 Bn and $10 Bn during the market debut assuming dilution of at least 10% of the holdings by the promoters. 

The announcement is likely to be made public at the upcoming Annual General Meeting of RIL later this year. 

The company is looking at both Indian and global listings. The report also stated that Jio may even be listed in the US on the Nasdaq stock exchange to bolster the company’s prospects. 

The move to go public has likely been hindered by the ongoing US-Russia tensions that have battered tech stock across the globe. Echoing the sentiment, one of the sources said, “Both Reliance Retail and Jio are expected to file the prospectus with market regulators once the dust over the Russia-Ukraine conflict settles.”

Jio’s plans for an IPO first came to light earlier this year. In January, the global brokerage firm, CLSA, had stated that the firm was planning to get listed this year itself. The report had pegged Jio’s mobile business at $99 Bn, 11.5 times the enterprise value to the EBITDA. This also factored in the $5 Bn enterprise value for Jio’s broadband business. 

Reliance Retail is likely to list on the bourses at the fag end of 2022, in around December. Jio is expected to follow suit right after, said the sources. In 2020, Jio Platforms had managed to raise more than $15.2 Bn (INR 1.15 Lakh Cr) in funding from 13 marquee investors such as Facebook, TPG, KKR, among others against 33% stake. It is likely that these investors might offer their stake in the IPO.

Reliance Retail is the retail arm of the conglomerate and sells items from groceries to apparel, and from footwear to consumer electronics. Its digital businesses arm is home to consumer businesses such as Ajio, JioMart, and other in-house brands such as Trends, Smart, Fresh, Digital among others.

Reliance Retail has nearly 14,500 stores across India and operates one of the largest ecommerce platforms in the country. Reliance Retail had reported its highest-ever revenue in the Q3 FY22, a 150% Year-on-Year (YoY) rise from the same quarter last financial year. The revenue stood at INR 57,714 Cr, as opposed to INR 47,064 Cr in October-December 2020. 

On the other hand, Reliance Jio is a market behemoth and is the biggest telecom player in the country. According to TRAI data, the telco has more than 402 Mn wireless subscribers across the country in February 2022. In addition, it also operates the broadband service and a slew of other services that have cornered the telecom market in India. 

Reliance Jio has made qualms about its digital ambitions. The company has actively pursued startups and acquired a host of them to add to its array of digital services. In February this year, Jio picked up a 25% stake in Pranav Mistry-led Two Platforms for $15 Mn. Later, Jio pumped in $200 Mn in Google-backed Glance in its Series D funding round. 

On the retail front too, Reliance Retail has made a slew of strategic investments to ramp up its presence in the ecommerce arena. In January, it had picked up a 25.8% stake in quick commerce startup, Dunzo, for $200 Mn. In January again, Jio acquired a 54% stake in robotics startup, Addverb Technologies, for $132 Mn.

From acquiring epharmacy startup Netmeds to furniture company Urban Ladder, RIL has gone on a shopping spree to shed its image of merely an oil conglomerate.

This also comes at a time when traditional business houses such as Tata are trying their hands at the digital space. From spinning off a new entity called Tata Digital to launching the Tata Neu super app, the Mumbai-based Tata group is now also looking to bank on the rising digital wave in the country to expand its business. 

The IPO will enable Reliance Retail to unlock additional sources of liquidity to compete with Tata Digital. The market debut will also enable Reliance Retail to better compete with the giant in the cash-guzzling space. 

As both Reliance Retail and Jio look to get listed, the overall market has been plagued by volatility. Add to that, public market correction in the US, coupled with apprehensions of interest  rate hike have led to bloodbath on stock markets across the globe. All new age stocks are witnessing sell offs, spooking investors and making startups apprehensive of listing.

PB Fintech, the parent company of fintech major PolicyBazaar, has fallen by more than 8% in the last five days (April 26-April 30, 2022). Zomato has wiped off nearly half of investor wealth in the first four months of 2022. Etailer Nykaa has seen its shares tank by more than 30% since its all-time high of INR 2,493 in December last year.

The situation will likely be complicated as LIC IPO looms near. The biggest IPO in the country’s history will likely squeeze liquidity out of the system, leaving investors high and dry. The disastrous listings have also spooked startups who were planning to get listed this year. From Oyo to Delhivery, many startups have reportedly deferred plans to get listed this year.

While there have been apprehensions before as well, an RIL listing could bring cheer to the market. With the ecommerce and telecom sectors likely to grow in the coming years, the listing could be a money maker for Reliance.