Here's all you need to know about Reliance- Jio financial services demerger

Jio Financial Services, the financial arm of Reliance Industries, India's largest company in terms of market value, completed its demerger from its parent company at a price of ₹261.85 per share as against the street expectations between 160-190 per share. 

The stock exchanges conducted a special pre-opening trading session for RIL today between 9 am and 10 am to determine the adjusted share price of RIL and the value of JFS.

Shares of Reliance Industries opened at ₹2,580 apiece, ex-Jio Financial Services (JFSL) on Thursday trade as against the previous closing price of ₹2,841.85.  The difference between these two prices amounts to ₹261.85, representing the value of Jio Financial Services.

Looking back, the demerger of Jio Financial Services was announced during Reliance Industries' second-quarter earnings of FY23, with a ratio of 1 equity share of Jio Financial for every one equity share held in Reliance Industries.

On June 28, the National Company Law Tribunal (NCLT) approved the demerger scheme leading to the merging of the Financial Services undertaking of Reliance Industries Ltd (RIL) with Reliance Strategic Investments Ltd (RSIL). Following the merger, RSIL has renamed Jio Financial Services Ltd (JFSL).

As per the scheme, 6.1% of treasury shares in RIL will be transferred to Jio Financial Services, which corresponds to 413 million treasury shares of Reliance Industries.

Eligibility for receiving JFS shares

The record date for determining the equity shareholders of RIL entitled to receive shares of JFSL has been fixed on July 20, 2023. This means that investors who own shares of Reliance as of Thursday's close will be eligible to receive Jio Financial services shares.

When will JFS shares listed on Exchanges?

Regarding the listing of JFS shares on exchanges, all necessary approvals are expected to be in place by September. JFS will commence lending activities immediately and proceed to obtain regulatory approvals for asset management, life, and general insurance, a process likely to take 12–18 months, according to analysts. 

Unique Approach and Competitive Advantage in the Fintech Landscape

JFS will differ from most other fintech as it will have access to huge amounts of data, gathered from non-financial relationships and can process and analyse this data in real-time to offer financial services similar to those offered by Alibaba, Amazon, Apple, Facebook, and Google. Also, unlike other fintechs.

JFS will have a large balance sheet, not be asset-light, and eventually manufacture most product offerings, giving it a significant competitive advantage.

RIL already has an NBFC licence, which it can leverage to kick-start consumer and merchant lending in a big way. Also, IRDA has been open to giving insurance licences, and RIL may get into insurance verticals. JFS can be a real threat to fintech business models as well as NBFCs, said global brokerage firm Macquarie Research.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.