SBI fuels Jio IPO demand with financing for Indian investors

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SBI fuels Jio IPO demand

Highlights

SBI offers financing for up to 60% of IPO bids.
Jio IPO was nearly three times subscribed on day one.
Brokers expect millions of new trading accounts.

According to Bloomberg, SBI Securities is arranging financing through its parent, State Bank of India, covering up to 60% of eligible IPO applications. Investors can apply for loans against subscriptions ranging from 500,000 rupees to 1 million rupees, with allotted shares serving as collateral.

SBI financing adds another route into the IPO

The lending arrangement allows qualifying investors to bid for more shares than their available cash would otherwise permit. It also introduces borrowing costs and repayment obligations, making the outcome more sensitive to Jio's performance after listing. Other brokerages have approached clients with similar financing proposals, although their terms have not been publicly detailed.

Jio's offering opened on October 21 and closes on October 23. The company is selling up to 270 million shares at 1,065 to 1,119 rupees each, targeting proceeds of approximately 302 billion rupees. At the upper end of the price range, its valuation could reach 10.3 trillion rupees.

Strong demand intensifies brokerage competition

Investor demand has been substantial since subscriptions began. The offering was fully covered within two hours and reached nearly three times the available shares by the end of its first day, according to BSE data. Institutional investors subscribed nine times their allocation, while wealthy investors bid for 1.55 times their reserved shares.

Retail participation was comparatively slower, reaching approximately 67% of the shares allocated to individual investors. Brokerages are attempting to close that gap through simplified applications and advance registration. HDFC Sky, Groww, and Zerodha introduced pre-booking options, allowing customers to prepare applications before the subscription period opened.

Angel One has taken a different approach, contacting Reliance Group employees and their families who lack brokerage accounts. The outreach targets potential first-time investors within the wider business group controlled by billionaire Mukesh Ambani.

Jio listing could reshape customer acquisition

Brokerages expect the IPO to bring as many as 5 million new investors into India's securities market during October. That would make the offering an important opportunity to acquire customers who may continue trading after Jio's market debut.

The scale recalls the 2022 listing of Life Insurance Corporation of India, which encouraged account openings among its extensive policyholder base. For SBI Securities and its competitors, the commercial opportunity extends beyond IPO commissions. Their longer-term returns will depend on whether newly registered investors remain active once the excitement surrounding Jio subsides.

Earlier, we reported that BlackRock joins Jio IPO rush as institutional bids top $26 billion.

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