Google, Meta hit jackpot with 280% growth in Jio investment

The much-anticipated Jio Platform Ltd (JPL) initial public offering (IPO) is expected to be around ₹37,000 crore, considering the borrowing repayment that the company is planning, sources in the know said. The company has proposed to issue 27 crore fresh equity shares, taking the total number of equity shares to around 897 crore. The fresh issue is expected to account for 3.1% of the total share capital.

In its draft red herring prospectus (DRHP), JPL said it will use ₹27,500 crore for the "prepayment, in full or in part, of certain outstanding borrowings availed by the material subsidiary, Reliance Jio Infocomm Ltd (RJIL)." In addition to repayments/prepayments, companies going for an IPO can use the proceeds for general corporate purposes. However, this is restricted to 25% of the total amount raised through the public issue. "The amount utilised for general corporate purposes shall not exceed 25% of the gross proceeds," JPL said in the DRHP.

Considering that ₹27,500 crore forms 75% of the issue, the IPO size will be around ₹36,666 crore and the total valuation of JPL will be ₹12.2 lakh crore, company insiders said. Rival telecom giant Bharti Airtel had a market capitalisation of ₹11.44 lakh crore on June 19.

The company said the share price will be discovered through the book-building process on the basis of various quantitative and qualitative factors. The face value of the equity shares is ₹10 each. Market regulator SEBI is expected to clear the IPO within 90 days, and the company can complete the listing within 12 months.

Considering the ₹12.2 lakh crore valuation, the early investors in JPL have hit the jackpot, with most of them generating returns of over 250%, sources said.

Google, which acquired a 7.73% equity stake for ₹33,737 crore in July 2020, will see the value of its stake rise to ₹94,500 crore at the estimated valuation of ₹12.2 lakh crore. The return on its investment will be around 280% in six years.

Meta (formerly Facebook) acquired a 9.99% stake in JPL for ₹43,574 crore in 2020, making it the largest minority shareholder in the company. The present value of its stake is estimated at ₹1.2 lakh crore—representing a 280% return on investment. The Public Investment Fund (a sovereign wealth fund of the Kingdom of Saudi Arabia), Omicron Asia Holdings (KKR), VEPF (Vista), SLP Redwood (Silver Lake), MIC Redwood (Mubadala), General Atlantic, Platinum Jasmine (Abu Dhabi Investment Authority), and India Markets (TPG Capital) are the other investors in JPL.