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Reliance Industries Ltd (RIL) will demerge its financial services arm and list it on the Indian stock exchanges. In a statement, the firm said Reliance shareholders will be issued one equity share of Jio Financial Services Ltd (JFSL) for every share they hold in the company.
JFSL plans to launch consumer and merchant lending business while continuing to evaluate organic growth, joint-venture partnerships as well as inorganic opportunities in insurance, asset management and digital broking segments, it said.
“Reliance Industries (RIL) announced the demerger and listing of its Financial Services business, thereby setting the stage for monetization of its verticals which we view as a positive trigger, unlocking value,” said analysts at brokerage and research firm Emkay.
The demerger will be done through a share-swap arrangement, Shareholders of RIL will get one share of JFSL for every share held by them. The investment of RIL in Reliance Industrial Investments and Holdings Limited (RIIHL) which is a part of the financial services undertaking of RIL, will stand transferred to JFSL.
“The Board of Directors of Reliance Industries Ltd (RIL), at its meeting held today (Friday), approved a Scheme of Arrangement amongst RIL, Reliance Strategic Investments Limited (RSIL) and their respective shareholders and creditors in terms of which, RIL will demerge its financial services undertaking into RSIL (to be renamed Jio Financial Services Limited or JFSL),” the company said on Friday.
RSIL is currently a wholly-owned subsidiary of RIL and an RBI-registered non-deposit-taking systemically important non-banking financial company.
JFSL will acquire liquid assets to provide adequate regulatory capital for lending to consumers and merchants, as well as incubate other financial services verticals such as insurance, payments, digital broking, and asset management for at least the next 3 years of business operations. The transaction is subject to customary statutory and regulatory approvals, including from NCLT, stock exchanges, SEBI and RBI.
According to ICICI Direct note, the long-term prospects and dominant standing of RIL in each of its product & service portfolio provide comfort for long-term value creation.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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John Miller has been writing about science, gaming, and tech culture for over a decade. He’s a top-rated reviewer with extensive experience helping people find the best deals on tech and more.
