Jio Platform plans to reduce debt by $3 billion from IPO proceeds

Jio Platforms Ltd. It plans to use the proceeds from its proposed initial share sale to repay its telecom unit’s external commercial borrowings of about $3 billion, a draft IPO document showed.

Jio, the crown jewel of billionaire Mukesh Ambani’s oil-to-retail conglomerate, filed draft documents on Friday for an IPO that includes up to 270 million new shares, starting the long-awaited process of unlocking shareholder value.

While the draft document did not specify the potential size of the IPO, it did mention that 275 billion rupees ($2.9 billion) would be used to repay existing loans while some of the funds could be used for general corporate purposes.

Reliance Jio Infocomm Ltd., its telecom unit, has three so-called ECB facilities worth a total of Rs 300.6 billion in dollar and yen terms, the document showed. Australia and New Zealand Banking Group Ltd., Bank of America Corp., Barclays Bank Plc, BNP Paribas and Citibank are among the lenders. According to the draft document, the borrowing is proposed to be fully or partially prepaid from Jio Platforms’ IPO net proceeds.

Such prepayments will help reduce net debt and related servicing costs, Jio Platforms said in its draft prospectus.

“Furthermore, the company believes this will improve our ability to raise additional resources in the future to fund potential business development opportunities,” it said.

Deleveraging the balance sheet will also position the Jio platform for continued investment in its strategic priorities, including 5G network densification and expansion, fixed broadband penetration, AI and cloud services.