What Jio Financial Services Demerger Means For Shareholders?

Reliance Industries, under Mukesh Ambani’s leadership, has set July 20, 2023, as the official date for splitting its financial services business, following its earlier decision to venture into the sector this year.

Reliance Strategic Investments Limited (RSIL), a wholly-owned subsidiary of Reliance Industries, will become Jio Financial Services (JFS) after the demerger, marking the first significant split for the company in a long time.

Demerger Math

Reliance Industries shareholders will receive one share of JFS for every Reliance Industries share they own. After announcing the record date, Reliance Industries’ share price rose, and the company, already India’s highest-valued, hit a market capitalisation of over ₹19.01 lakh crore on July 17, 2023.

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The demerger stems from the opportunity that the Indian financial services industry, which has seen incredible growth and holds substantial potential, presents. Reliance Industries aims to become one of India’s largest Non-Banking Financial Companies (NBFCs) by leveraging this demerger.

JFS stands to gain significantly from the technological resources and vast cash reserves of Reliance Industries. After the demerger, JFS intends to procure liquid assets to meet the regulatory requirements necessary to kick-start its lending business.

The company’s primary focus will be on the retail and MSME credit market segment. It also plans to develop other financial service areas, including insurance, digital payments, broking, and asset management.

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Posted In: EquitiesMarketsJio Financial ServicesReliance Industries