Reliance Industries Ltd. (RIL) has been granted approval by the National Company Law Tribunal (NCLT) for demerger, causing excitement among investors in the primary and secondary markets. The company plans to demerge its financial services undertaking into Reliance Strategic Investments Limited (RSIL) and later rename and list it as Jio Financial Services Limited (JFSL). JFSL and its subsidiaries will leverage the technology capability of Reliance and focus on the digital delivery of financial products to democratize financial services access for 1.4 billion Indians. Jio will lend to consumers and merchants based on proprietary data analytics and will eventually branch out to insurance, payments, digital broking, and asset management. Reliance Strategic Investments Limited (RSIL) shall issue and allot shares in ratio of 1:1, one fully paid-up equity share of RSIL having a face value of Rs 10 each for every one fully paid-up equity share of Rs 10 each of the Reliance Industries.
JFS will hold 413 mn shares of RIL, representing 6.1% of the total outstanding shares, which are valued at over INR 1 trillion. This would represent a substantial portion of Jio’s net worth. Jio Financial Services (JFS) may rank as the fifth-largest financial services company in terms of net worth following the demerger.
Hitesh Kumar Sethia will serve as managing director and CEO of the new organization, with the Reserve Bank of India requiring approval. Sethia has held various high profile positions. RIL's board has also approved the appointments of former finance secretary Rajiv Mehrishi, former head of the PNB Sunil Mehta, and certified public accountant Bimal Manu Tanna as additional directors for a period of five years, subject to RBI approval. Isha Ambani and Anshuman Thakur have been appointed by the board as non-executive directors.
The National Stock Exchange is set to conduct a special pre-open session (SPOS) on July 20 from 9 a.m. to 10 a.m. in shares of Reliance Industries for the price discovery of its demerged entity, Jio Financial Services. The NSE will temporarily add Jio Financial to the Nifty 50, Nifty 100, Nifty 200, Nifty 500, and 15 other indices. After the close of market hours, a dummy symbol for Jio Financial will be created, which will be added to all indices. Jio Financial will remain part of the Nifty 50 and other indices at a constant price until it officially gets listed on the exchanges. Post-listing, the dummy script will be replaced with an actual symbol. After the close of trading on the 3rd day of listing at the market-determined price, Jio Financial will be removed from all indices.
The company announced that all existing contracts with expiry dates of July 27, August 31, and September 28, 2023, will expire on July 19, 2023. The settlement methodology for these contracts will be communicated separately by the respective Clearing Corporations. Derivatives contracts on Reliance will be reintroduced on July 20, 2023, with expiry dates of July 27, 2023, August 31, 2023, and September 28, 2023. A separate circular will be issued on July 19, 2023, after market hours, containing a list of option strikes. The market will be informed of a minimum of five in-the-money (ITM) strikes, one at-the-money (ATM) strike, and five out-of-the-money (OTM) strikes, which will be made available throughout the day based on the price movement of the security in the Capital Market segment.
Reliance shares, which were trading at the 2600 level before the demerger announcement, have inched up more than 8% and now trading over Rs. 2800.