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Kolkata: While Dalal Street waits for the mega IPOs such as Jio Platforms and NSE in a tepid primary market, reports have stated that Reliance Industries is altering the contours of the mega IPO by switching from a combination of fresh shares and OFS to a fresh only shares. Any investor, as a matter of principle, prefers a fresh-only shares IPO to a combination of OFS and fresh shares. The reason is investor disagreements on pricing, reports have stated. It said that the decision prioritises protection of retail investors by allowing market determination of post-listing prices. Moreover, the entire IPO proceeds will accrue to the company and will help the business to pursue growth. OFS proceeds never go to the company but line the pocket of the existing shareholders who company choose to dilute their holding.

Quandry of Jio IPO pricing

Jio happens to be the country’s largest telecom operator by market share. Talks about its IPO was in the public forum for more than a year now. In August 202, Reliance chairman Mukesh Ambani announced that Jio will target listing by the first half of FY27. It was said that the issue could mobilise more than Rs 40,000 crore.

Reports have said that Jio has been discussing teh contours of the IPO with global technology firms for more than a month. Sovereign wealth funds and private equity investors were also involved in the discussion to finalise the pricing of the issue. “There is an inherent conflict of interest, which is unique to Jio… Shareholders want to price the issue as high as possible. But that creates two risks. First, the issue could become too large for markets to absorb,” the report quoted an official as saying.

Protection of retail investors

A second person said the promoter’s stance has been consistent. “Mukesh Ambani’s priority from day one has been to protect retail investors… There must be room for upside in the stock price post listing. Therefore, Reliance now plans to let the market determine the price post listing and PE investors can later sell in the open market if they wish,” said another person familiar with the matter.

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