Demerger of Reliance Industries Ltd and Jio Finance
July 20 was the record day as the Reliance Strategic Investments Ltd (RSIL) demerger from Reliance Industries Ltd (RIL) took place. A special pre-opening session (SPOS) was held by the stock exchanges on July 20, lasting from 9 am to 10 am, with the purpose of establishing the share price of RIL.
In September 2022, Reliance Industries announced to separate its digital fintech division to generate value for its shareholders. This spin-off, known as RSIL, received approval from both shareholders and creditors and was subsequently renamed Jio Financial Services. The final approval from the National Company Law Tribunal was granted in June.
The demerger involves spinning off 6.1% of Reliance Industries' treasury shares to create Jio Financial Services. Eligible shareholders of Reliance will receive one share of the demerged entity for each share they hold in the conglomerate. The record date for this allotment was set as July 20.
Analysts have valued Jio Financial Services between 160 and 200 apiece, with Axis Securities valuing it at 1,08,597 crores based on treasury stock valuation. Jio shares would be valued at 160 per share with the company's total outstanding shares at 6.77 billion.
After the demerger, Jio Financial Services will have investments in six companies: Reliance Industrial Investments and Holdings (RIIHL), Reliance Payment Solutions, Jio Payments Bank, Reliance Retail Finance, Jio Information Aggregator Services, and Reliance Retail Insurance Broking.
In the rapidly evolving financial services landscape, both traditional institutions and new players must adapt to changing consumer demands and embrace technological advancements. The impact of Jio Financial Services as a disruptor or a sector dynamic reshape is yet to be seen, but its formidable presence highlights the importance of embracing digital transformation and customer-centric innovation for the industry's future.
Kautilya, IBS Mumbai.