RIL-Led Jio IPO Faces Setback Due to US-Iran Conflict Fallout

Reliance Industries' Jio IPO Plans Hit Roadblock Due to Iran War

Reliance Industries Ltd.'s ambitious plan to sell shares in its digital arm Jio Platforms Ltd., potentially India's biggest-ever initial public offering, is facing numerous challenges exacerbated by the ongoing war in Iran. The conglomerate, controlled by billionaire Mukesh Ambani, has slowed its preparations as it reviews the deal's structure in response to geopolitical tensions and market volatility.

According to people familiar with the matter, the company still plans to file draft paperwork for the IPO and could pull the trigger at any time, although it has no firm date to do so. However, the Middle East conflict has had a significant impact on the share sale plan, worsening a downturn in Indian stocks, accelerating capital flight, and slowing decision-making by some of Jio's key stakeholders.

The main concern is a valuation issue after a deepening slump in the country's equity markets, which makes it increasingly difficult to balance the returns sought by existing investors with creating a buzz around the stock. The downturn also creates the risk of valuing Jio below its rival Bharti Airtel Ltd.

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Jio's listing, the first public offering by a major Reliance unit in nearly two decades, would be a landmark event for India's struggling capital markets. The plan received a significant boost in March when the government approved changes to listing requirements to facilitate the biggest deals. However, Ambani's pledge to complete the deal in the first half of this year is at risk.

Reliance Industries has also pivoted to offering entirely new shares, scrapping earlier plans of sell-downs by existing investors. The IPO could fetch as much as $4 billion, which would make it the country's largest ever listing, surpassing the $3.3 billion raised by Hyundai Motor India Ltd.

India has been grappling with the economic impact of the war in Iran, prompting Prime Minister Narendra Modi to appeal to citizens to curb fuel consumption and limit foreign travel. The government is moving to defend its foreign-exchange reserves and stem fund outflows as soaring oil prices threaten to balloon the nation's import bill.

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This market malaise threatens to cut into the returns of Jio's star-studded roster of global investors, including Meta Platforms Inc., Alphabet Inc.'s Google, Saudi Arabia's Public Investment Fund, Mubadala Investment Co., Abu Dhabi Investment Authority, Silver Lake Management, KKR & Co., Vista Equity Partners, and General Atlantic.

The war has especially made it difficult for some of the Middle East investors to move ahead with procedural steps such as board approvals. Jio has been working with a stable of Wall Street and domestic advisers on the deal, including Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., and Morgan Stanley, alongside local firms JM Financial Ltd. and Kotak Mahindra Capital Co.