Record-breaking IPO of Jio Platforms not lucrative enough for bankers
What's the story
Jio Platforms, the digital and telecom giant owned by billionaire Mukesh Ambani, has raised a record amount of funds through its initial public offering (IPO). The company is paying around $20.7 million in fees to 19 banks for the roughly $3.1 billion IPO. However, this fee amounts to only about 0.65% of the issue size, which is lower than several previous offerings in India due to intense competition among investment bankers.
Market dynamics
Intense competition among bankers leads to fee compression
The fierce competition among investment bankers in India has led to a compression of fees, especially for high-profile deals.
Banks are often ready to accept thinner margins for a chance at working on marquee transactions.
The real benefit comes from league-table rankings, bragging rights, and credentials that help them secure future business opportunities.
Fee comparison
Fee structure contrast with other high-profile IPOs
The lower fee structure in Jio's case is a stark contrast to previous high-profile IPOs.
For instance, Hyundai Motor India paid around ₹4.9 billion to bankers for its then-record-breaking ₹2.8 billion IPO in 2024.
Similarly, Paytm parent One 97 Communications paid about ₹3.2 billion for its ₹183 billion offering in 2021, while Swiggy handed out nearly ₹2.8 billion for its ₹113 billion share sale.
Market response
Investor enthusiasm for Jio's IPO
Despite the lower fees for bankers, investor enthusiasm for Jio's IPO has been phenomenal.
The IPO was fully subscribed within the first 100 minutes of bidding and had received bids almost 22 times the shares on offer by Friday, according to BSE data.
This shows that even though bankers may not be making as much money from this deal, investors are still very interested in what Jio has to offer.