Reliance Industries’ shareholders and creditors have given the green light for the demerger of the company’s financial services arm, Reliance Strategic Ventures Ltd (RSIL), according to filings with the stock exchanges. The demerger received 99.99% of votes in favour in a shareholders’ meeting held on May 2. Unsecured creditors also gave their support, with 99.99% of votes in favour, while 100% of secured lenders supported the plan. Post-demerger, RSIL will be rebranded as Jio Financial Services Ltd (JFSL). The demerger will see one share of the new company, valued at INR10 ($0.13) each, issued for every share held in Reliance.
Jefferies Research suggests that all necessary approvals for the listing of JFS shares should be in place by September. JFS will commence lending activities immediately and proceed with regulatory approvals for asset management, life and general insurance. Regulatory approvals are expected to take between 12-18 months. Reliance chairman Mukesh Ambani had announced the demerger in October last year, stating that JFS would be a “truly transformational, customer-centric and digital-first financial services enterprise”. K.V. Kamath, former MD and CEO of ICICI Bank, has been named non-executive chairman of JFS.
Currently, RSIL is a wholly-owned subsidiary of Reliance and is an RBI-registered non-deposit-taking systemically important non-banking financial company. The company’s financial services business had a combined revenue of INR15.36bn in the financial year 2022 and a combined asset base of INR279.64bn. Brokerage firm Macquarie values Jio Financial Services at more than INR1.52tn ($20.36bn), which would make it the fifth largest financial services firm in India.
Reliance closed 1.16% higher at INR2,447.80 on the Bombay Stock Exchange. The demerger of RSIL from Reliance is a strategic move to grow and expand JFS as a standalone entity and allow Reliance to focus on other areas of business. The demerger is expected to improve the financial services business of JFS and its value proposition, which will be beneficial to its customers and investors alike.
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