In simple terms, an IPO or Initial Public Offering is when a company decides to sell its shares or ownership stakes. People can buy these shares through the stock exchange if they think the company will grow and become more valuable over time.
A company files an IPO to raise money and become publicly traded. According to a Bloomberg report, Jio Platforms’ board has approved the issue of as many as new 270 million shares of face value of 10 rupees each.
It was reported in March that Jio was in the final stages of preparing its draft red herring prospectus to file paperwork for the IPO with SEBI.
Earlier this year, the government modified norms to allow companies with a post-issue valuation exceeding ₹5 trillion (approximately $54 billion) to list by diluting a minimum of just 2.5% equity. This was a sharp drop from the previous 5% minimum requirement for mega-cap companies, and significantly lower than the standard 25% free-float rule.
It was after this that reports of Jio planning to file an IPO gained momentum.