Reliance to Retain Control Over Jio Post IPO, But Stake will Reduce

Reliance Industries Limited (RIL), the largest conglomerate in India, is all set to see one of its most valuable companies get listed in the stock exchanges. Jio Platforms Limited (JPL) IPO (Initial Public Offering) is now open for the markets. The telco is raising about Rs 30,000 crore through the IPO. The majority of these funds are earmarked to be used for clearing debt. The remaining will go towards corporate expenses. If you are a Jio employee or Reliance Industries shareholder, you will be able to get shares in a reserved manner.

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Moody’s Ratings said that post the IPO, Reliance Industries financial flexibility will be strengthened by reducing debt and interest costs. It will also pave way for the company to access capital for future investments. As of now, Reliance owns 66.4% stake in Jio. After the IPO, the stake of Reliance will reduce in the company because this is an issue of fresh shares in the market. There are no secondary shares on offer in this IPO.

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Reliance Jio IPO Will be Credit Positive for Reliance Industries

“The IPO is credit positive for RIL because the proceeds will reduce debt and associated servicing costs, increasing its capacity to fund investments towards telecommunications networks and digital services at Jio Platforms, without increasing leverage,” said Moody’s said.

The listing and separation of Jio from Reliance Industries will open up more routes for access to capital and funding sources. As of now, when investors were putting money in Jio, they were essentiallly giving the money to Reliance Industries owned entity. It was the same with Reliance Industries when someone was giving money to Reliance, they were confused where it will be used, since there is retail, telecom and FMCG.