Some PE Investors In Reliance Jio May Look For An Exit Soon, Says Bernstein

Some private equity (PE) investors who invested in Reliance Industries’ wholly-owned subsidiary Reliance Jio are likely to look for an exit soon, according to brokerage firm Bernstein.

“As typical PE holding period being nearly 4 years, we expect some investors to look for an exit (more details likely in AGM in June/July),” the firm was quoted as saying in a report by Hindu Business Line.

Jio’s Fundraising Spree In 2020

Three years ago, Reliance went on a fundraising spree for Jio and got around $20 Bn from global investors for a 33% stake. Meta acquired a 9.99% stake in Jio Platforms, the subsidiary of Reliance which houses telecom company Reliance Jio Infocomm, for INR 43,574 Cr ($5.7 Bn). Jio Platforms also raised INR 33,737 Cr ($4.5 Bn) from tech giant Google for 7.73% equity stake.

Among other investors, Vista Equity Partners acquired a 2.32% stake for INR 11,367 Cr ($1.5 Bn). Jio also raised INR 11,367 Cr ($1.5 Bn) funding from American global investment firm KKR in exchange for a 2.32% equity stake.

In addition, Silver Lake and General Atlantic invested INR 5,655 Cr ($746 Mn) and INR 6,600 Cr ($ 870 Mn), respectively, in the company. Jio also raised INR 730 Cr ($xxx) from California-based venture capital firm Qualcomm Ventures for a 0.15% stake.

Jio raised the funds when it was looking to further its share in the telecom market and foray into various digital businesses.

Jio’s Financial Performance

Reliance Jio’s net profit rose 15.6% year-on-year (YoY) to INR 4,984 Cr in the fourth quarter of the financial year 2022-23 (Q4 FY23). However, profit grew about 2% on a quarter-on-quarter (QoQ) basis. Revenue from operations stood at INR 25,465 Cr in Q4.

For FY23, Jio’s net profit rose 15.6% YoY to INR 19,124 Cr.

The telco’s customer base stood at 439.3 Mn at the end of March 2023 quarter, a jump of 7.1% YoY. While it added nearly 29 Mn users in FY23, the churn was at around 2%.

The company also said it extended its 5G services to more than 2,300 cities and towns across India, having deployed more than 60,000 5G sites across 700 MHz and 3,500 MHz bands. The telco claimed that it was on track to complete a pan-India rollout by December 2023.

Jio’s IPO Plans

There were speculations about Reliance looking to list Jio and Reliance Retail on the bourses by the end of 2022. However, the conglomerate’s chairman and managing director Mukesh Ambani said in its 45th annual general meeting (AGM) that he would share an update on the initial public offerings (IPOs) at the AGM of 2023.

“I will take up your inputs with our board of directors on the question on IPO for Jio and Retail. The principles on timing and valuation of IPOs remain unchanged. I have outlined the plans for both businesses,” Ambani said.