In a significant development, Reliance Industries Ltd. (RIL) has received approval from the National Company Law Tribunal (NCLT) to proceed with its demerger plans. As a result, market enthusiasm is soaring for the upcoming IPO of Jio Financial Services, a subsidiary of RIL. The demerger involves transferring the financial services undertaking to Reliance Strategic Investments Limited (RSIL), which will be renamed and listed as Jio Financial Services Limited (JFSL).
According to the announcement made by RIL to the Indian stock markets, the NCLT has granted clearance for the demerger of the company’s financial services operations. The Scheme stipulates that RSIL will issue and allot one fully paid-up equity share of RSIL with a face value of Rs 10 each to shareholders of RIL for every fully paid-up equity share of Rs 10 each held by them as of the Record Date.
The conglomerate has further disclosed that Hitesh Kumar Sethia will assume the role of Managing Director and CEO of the new organization, subject to approval from the Reserve Bank of India. Sethia brings a wealth of experience, having been a key part of the setup team for ICICI Bank in Germany and Canada, as well as holding senior positions in the UK, Hong Kong, and Mumbai.
Additionally, RSIL has approved the appointments of Rajiv Mehrishi, former Finance Secretary; Sunil Mehta, former head of Punjab National Bank; and Bimal Manu Tanna, a certified public accountant, as additional directors for a period of five years. Isha Ambani, daughter of Mukesh Ambani, and Anshuman Thakur have also been appointed as non-executive directors by the board.
Reliance Industries has been actively building a robust digital-led financial services platform through various digital apps. Jio Financial Services aims to introduce a consumer and merchant loan company based on proprietary data analytics, which, following the demerger, could position it as the fifth-largest financial services company in terms of net worth.
According to analysts at Macquarie, JioFS is valued in the range of Rs 90,000-150,000 crore, and Jefferies estimates a base case valuation of Rs 179 per share for JFS in RIL’s sum of the parts (SoTP). RIL’s overall net worth is estimated to be over Rs 1,50,000 crore, with Reliance Industries’ shares accounting for approximately Rs 1,10,000 crore.
The stock price of RIL closed at Rs 2635.45 per share on Friday, reflecting the market’s positive response to the demerger and the potential of Jio Financial Services. This strategic move marks an important milestone in the evolution of Reliance Industries’ financial services ambitions, with Isha Ambani playing a key role as a non-executive director in shaping its future.
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