Reliance Industries Ltd.’s plan to sell shares in digital arm Jio Platforms Ltd. — potentially India’s biggest-ever initial public offering — is running into a thicket of challenges exacerbated by the war in Iran.
The conglomerate controlled by billionaire Mukesh Ambani has slowed preparations as it reviews the deal’s structure in response to geopolitical tensions and market volatility, according to people familiar with the matter. The company still plans to file draft paperwork for the IPO and could pull the trigger at any time, though it has no firm date to do so, the people said, asking not to be identified to discuss private deliberations.
Why is Jio IPO delayed?
The Middle East conflict has impacted the share sale plan in multiple ways: it worsened a downturn in Indian stocks, accelerated capital flight and slowed decision-making by some of Jio’s key stakeholders. At the heart of the issue is a valuation concern after a deepening slump in the country’s equity markets, the people said.
The weakness makes it even more difficult to thread the needle between giving existing investors the returns they seek while also creating a buzz around the stock — a delicate balance that would be much easier in a booming market. The downturn also creates the risk of valuing Jio below rival Bharti Airtel Ltd.
Jio’s listing, the first public offering by a major Reliance unit in nearly two decades, would be a landmark event for India’s struggling capital markets. The plan got a major boost in March, when the government approved changes to listing requirements to facilitate the biggest deals.
But Ambani’s pledge to complete the deal in the first half of this year is at risk. The company has also pivoted to offering entirely new shares, scrapping earlier plans of selldowns by existing investors, people familiar with the deal have said.
A representative for Reliance Industries didn’t immediately offer a comment.
The IPO could 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. That would be a shot in the arm for a market where listings this year have raised about $3.5 billion so far, falling well short of the record pace in the last two years.
Part of the reason is that India has been grappling with the economic impact of the war in Iran, which has prompted Prime Minister Narendra Modi to appeal to citizens to curb fuel consumption and limit foreign travel. The government is moving to defend its foreign-exchange reserves and stem fund outflows as soaring oil prices threaten to balloon the nation’s import bill.
That market malaise threatens to cut into the returns of Jio’s star-studded roster of global investors, including Meta Platforms Inc., Alphabet Inc.’s Google, Saudi Arabia’s Public Investment Fund, Mubadala Investment Co., Abu Dhabi Investment Authority, Silver Lake Management, KKR & Co., Vista Equity Partners and General Atlantic.
The war has especially made it difficult for some of the Middle East investors to move ahead with procedural steps such as board approvals, one of the people said.
Jio has been working with a stable of Wall Street and domestic advisers on the deal. Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., and Morgan Stanley are advising on the deal, alongside local firms JM Financial Ltd. and Kotak Mahindra Capital Co., people familiar with the matter have said.
