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Reliance Industries, led by Indian billionaire Mukesh Ambani, is gearing up for a significant milestone with the impending Initial Public Offering (IPO) of its telecommunications arm, Reliance Jio. This IPO is anticipated to be the largest ever in India, with analysts pegging the company's valuation at over $100 billion. While Ambani had initially indicated that both Reliance Jio and Reliance Retail would go public within a five-year timeframe in 2019, concrete timelines have yet to be confirmed.
The company's decision to proceed with the Jio IPO in 2025 comes on the heels of its dominance in the Indian telecom sector, having garnered a massive 479 million subscribers. However, the retail division's public offering is slated for a later date, likely after 2025, as Reliance seeks to address certain operational matters within the unit. This staggered approach is intended to avoid the logistical challenges of two simultaneous large-scale IPOs.
Reliance Jio is poised to face competition from Elon Musk's Starlink satellite internet service, which is set to enter the Indian market. However, Jio has strategically forged partnerships with tech giants Google and Meta, as well as Nvidia, to leverage artificial intelligence capabilities and strengthen its position. While the specific details of the IPO, including valuation and banking partners, remain under wraps, Jefferies estimates Jio's IPO value at a hefty $112 billion. Reliance is aiming to surpass the existing record for IPOs in India, which was set by Hyundai India at $3.3 billion.
India's IPO market has exhibited robust growth in recent times, with 270 companies raising a collective $12.58 billion by October, surpassing the previous year's total of $7.42 billion. However, Reliance's retail division has faced some challenges, including losses in certain physical stores, impacting its revenue per square foot. The unit has, however, expanded aggressively across various formats, including online sales, and is focused on quick commerce, aiming to capitalize on the burgeoning 10-minute delivery sector.
Despite these efforts, Reliance Retail experienced its first quarterly revenue decline in at least three years during the July-September period, registering a 1.1% year-over-year decrease. This downturn is attributed to intensified competition in the quick commerce space, affecting supermarket sales. Nevertheless, Bernstein analysts valued the retail business at $112 billion in the previous year, underscoring its significant market presence.
Reliance's global expansion is evident in its acquisition of Hamleys and its partnerships with premium brands like Jimmy Choo, Marks & Spencer, and Pret A Manger in India. The company's strategy of attracting foreign investment has yielded impressive results, with foreign investors holding a 33% stake in Jio Platforms, the entity managing telecom and digital operations, after investing $17.84 billion. Similarly, Reliance Retail has secured $7.44 billion from international investors, representing approximately a 12% stake.