The initial public offering of Jio Platforms will strengthen its parent Reliance Industries’ financial flexibility by reducing debt and interest costs while broadening access to capital for future investments, Moody’s Ratings said, describing the transaction as credit positive.
Jio Platforms, in which Reliance owns a 66.4 per cent stake, launched its IPO on Wednesday, seeking to raise about `30,213 crore at the upper end of its price band of `1,065-1,119 per share. The offering, comprising entirely fresh shares, will close on October 23.
Jio Platforms will use up to `27,500 crore of the proceeds to repay borrowings at its wholly owned telecom subsidiary, Reliance Jio Infocomm Ltd, with the remaining funds available for growth capital expenditure and working capital needs, according to CreditSights.
“The IPO is credit positive for RIL because the proceeds will reduce debt and associated servicing costs, increasing its capacity to fund investments towards telecommunications networks and digital services at Jio Platforms, without increasing leverage,” Moody’s Ratings said.
The listing, it said, “will also diversify Jio Platforms’ funding sources and broaden its access to domestic and international capital for future investments, acquisitions and strategic partnerships”.