By Vibhuti Sharma, Aditya Kalra and Yantoultra Ngui
MUMBAI, Oct 21 (Reuters) - Investors flocked to Jio Platforms’ $3.2 billion IPO on Wednesday, with bids covering the shares on offer in under two hours and reaching 3.16 times by the end of the first day, in India’s largest IPO and the first by Mukesh Ambani’s Reliance in 20 years.
The IPO has been seen as a major test of global appetite for new share offerings at a time when investors have sharpened their scrutiny of AI-related companies, which some
analysts say could see them pivoting away from the technology. Almost 90% of Jio Platforms' revenue comes from its telecoms business.
With backing from Meta, Alphabet's Google and institutional investors, Jio Platforms is home to India's biggest telecoms company with more than 500 million subscribers, making it the world's second-largest telecoms operator in a single country after China Mobile.
Institutional investors covered the allotted tranche in 10 minutes, while the overall book was filled within 100 minutes, said two people close to the IPO.
"It's the fastest in the history of India," one said.
The investor rush comes even as big IPOs in India generally start slowly, with institutions often waiting until the final hours to bid. In other big IPOs, the National Stock Exchange of India's share sale recently was only 42% subscribed on its first day, and Hyundai Motor India's only 18%.
Aishvarya Dadheech, founder at Fident Asset Management, said Jio's rapid IPO bidding was surprising given large IPOs in India typically get fully subscribed later on, adding: "Jio has changed India's telecom landscape and (the IPO) offers a very reasonable valuation with strong fundamentals".
Jio Platforms' telecom business, led by Ambani's son Akash, began in 2016 with a bet that Indians would use the internet far more if it cost almost nothing. It rapidly took market share from rivals such as Bharti Airtel and Vodafone Idea by offering cheap data and free voice calls.
The IPO values Jio Platforms at up to $108.3 billion, potentially making it one of India's biggest companies by market capitalisation when trading starts on October 28.
Bharti Airtel's market capitalisation on Wednesday stood at $123.38 billion.
QUICK BIDS
Institutional investors have so far shown more enthusiasm than retail, with qualified institutional buyers subscribing 9.42 times their reserved portion in the IPO, exchange data showed, while retail investors, for whom around a third of the issue is reserved, have so far bid for 0.73 times their quota.
New bids, however, were not coming in as fast as the early morning hours, according to live stock exchange data.
For many Indians, Reliance Industries, which listed in 1977 and has businesses ranging from retail to oil, has been a long-term wealth generator and a savings vehicle that helped pay for a child's education or a wedding.
Since 1990, for which LSEG data is available, Reliance's Mumbai-traded shares have risen around 330-fold.
Jio Platforms this week allotted shares worth $853 million to more than 200 global and domestic investors including Abu Dhabi Investment Authority and BlackRock after the reserved portion drew bids totalling more than $25 billion.
Retail investors, as well as employees and shareholders of Reliance, are participating in the offering that closes on Friday and has a 1,065 to 1,119 rupees per share price range.
FESTIVE LAUNCH DATE
The IPO is the first from Reliance since 2006.
Ambani first promised a listing within five years in 2019, and the plans were also delayed in 2025. A filing for as early as March was pushed back after the Iran war dampened IPO appetite.
Jio Platforms is pitching its IPO during an ongoing Hindu festive season, which is considered auspicious for purchases, but at a time when Indian markets have remained subdued in recent weeks.
Reliance paid its more than 400,000 employees their salaries about 15 days early this month, and the company helped facilitate share account-opening services in recent weeks to those interested in applying for the IPO, a person in the industry with direct knowledge of the situation said.
Reliance did not respond to a request for comment.
Jio Platforms earned about $3.2 billion in profit on $15.5 billion of revenue in the year to March.
The firm plans to use up to $2.89 billion of the proceeds to repay or prepay borrowings at its telecoms unit. The rest will be used for general corporate purposes, including capital expenditure, Jio's IPO prospectus showed.
(Additional reporting by Chandini Monnappa in Bengaluru; Writing by Kane Wu; Editing by Muralikumar Anantharaman and Alexander Smith)
