RIL announces demerger of financial services undertaking, to list Jio Financial Services

Reliance Industries Limited (RIL) will demerge its financial services undertaking and will create a separate entity, which will be named Jio Financial Services Limited (JFS), the company said on Friday. The new entity, JFS, would be listed on the Indian stock exchanges.

"The Board of Directors of Reliance Industries Ltd (RIL), at its meeting held today (Friday), approved a Scheme of Arrangement amongst RIL, Reliance Strategic Investments Limited (RSIL) and their respective shareholders and creditors in terms of which, RIL will demerge its financial services undertaking into RSIL (to be renamed Jio Financial Services Limited or JFSL)," RIL said in a statement.

The financial services are currently under Reliance Strategic Investments Limited (RSIL), which is a wholly-owned subsidiary of RIL and a non-banking financial company registered with the RBI.

Pursuant to the scheme, the shareholders of RIL will receive one equity share of JFS of face value Rs 10 for one fully paid-up equity share of Rs 10 held in RIL, the Mumbai-headquartered conglomerate said.

The investment of RIL in Reliance Industrial Investments and Holdings Limited (RIIHL), which is a part of the financial services undertaking of Reliance Industries, will stand transferred to JFSL.

JFS will acquire liquid assets to provide adequate regulatory capital for lending to consumers and merchants, and incubate other financial services verticals such as insurance, payments, digital broking, and asset management for at least the next three years of business operations.

The regulatory licenses for the key businesses are in place, the statement added.

JFS and its subsidiaries will focus on the digital delivery of financial products to democratise financial services access for 1.4 billion Indians. It also plans to launch a consumer and merchant lending business based on proprietary data analytics to complement and supplement the traditional credit bureau-based underwriting, the RIL said.

RIL MD and Chairman Mukesh Ambani said the JFS will be a truly transformational, customer-centric, and digital-first financial services enterprise offering simple, affordable, innovative, and intuitive financial services products to all Indians. JFS, he said, will be a technology-led business, delivering financial products digitally by leveraging the nationwide omnichannel presence of Reliance’s consumer businesses.

"JFS is uniquely positioned to capture multiple growth opportunities in financial services bringing millions of Indians into formal financial institutions,” Ambani added.

Citi, Morgan Stanley and Goldman Sachs are acting as financial advisors and Khaitan & Co is acting as legal advisor in relation to the proposed transaction.