Reliance announces July 20 as record date for Jio Financial demerger - Economic Times

NEW DELHI: Billionaire Mukesh Ambani-led Reliance Industries (RIL) today announced July 20 as the record date for the demerger of its financial services arm Reliance Strategic Investments, which would be renamed later on as Jio Financial Services (JFSL).

The decision to this effect was taken at a board meeting of the company yesterday after getting regulatory approval on the demerger last month.

The demerger will unlock value for 36 lakh-strong shareholder base of RIL, India's largest company by market capitalisation. As part of the plan, RIL shareholders will get one share of Jio Financial for every share they own of RIL. The stock is already up 13% in the last three months and ended Friday's session marginally lower at Rs 2,635.45.

Also read: Reliance Retail set to cancel all public shares

"In accordance with the terms of the Scheme, Thursday, July 20, 2023 has been fixed as the Record Date for the purpose of determining the equity shareholders of the Company entitled to receive the Resulting Company New Equity Shares," RIL said in a regulatory filing, adding that the effective date of the demerger scheme is July 1.

The board has also approved the appointment of McLaren Strategic Ventures' Hitesh Sethia as the CEO and MD of RSIL for 3 years. Mukesh Ambani's daughter Isha has also been appointed as a non-executive director of the financial services company subject to approval from the Reserve Bank of India (RBI).

Former union home secretary Rajiv Mehrishi and PNB's former MD and CEO Sunil Mehta would also join the company as independent directors.
In RIL's annual general meeting (AGM), the date of which has not been announced yet, the Ambanis are expected to lay out the roadmap for JFSL before it gets listed on stock exchanges. It was earlier reported that JFSL may get listed in September but an official announcement is awaited.
Global brokerage firm JPMorgan has estimated Jio Financial's share price at Rs 189, Jefferies at Rs 179, while Centrum Broking has a range of Rs 157-190.

JPMorgan, which has an overweight rating on RIL with a target price of Rs 2,960, believes that the implied value could move higher once the business strategy and targets are made public.

JFSL is expected to become India's fifth-largest financier in terms of capital and compete directly with the likes of Paytm and Bajaj Finance. RSIL and Financial services undertaking has a combined networth of Rs 280 billion (FY22) which includes investments of 6.1% stake (market value of Rs 980bn) in RIL. JFSL may in staggered manner monetize its investments for growth and incubate other businesses in financial services, Centrum Broking said.

The financial services undertaking has investments in 6 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.

"We value JFSL’s core networth at 3-5x P/BV and investments in RIL at 30% holding company discount to arrive at a price range of Rs157-190 for JFSL. Post demerger, promoter’s stake in JFSL will be at 49.11%. JFSL’s per share value in RIL’s SOTP is in the price range of Rs147-178," Centrum said.

RIL had earlier said the demerger decision was taken as the nature and competition in financial service business is distinct from other businesses and is capable of attracting a different set of investors, strategic partners, lenders and other stakeholders.

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Reliance announces July 20 as record date for Jio Financial demerger - Economic Times
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