New Delhi: Reliance Industries, India’s oil-to-telecom conglomerate, has received the approval of secured creditors, non-secured creditors and equity shareholders to demerge its subsidiary, Reliance Strategic Investments (RSIL), from the parent company. The demerger will enable Reliance’s financial services business to attract different sets of strategic partners, investors, and lenders with specific interests in the sector. The demerger of Jio Financial Services will enable further growth and development of the financial services business, which would require a differentiated strategy aligned with the industry-specific risks, market dynamics, and growth trajectory.
The financial services business of Reliance Industries is currently carried through its subsidiaries and joint ventures, but the nature and competition involved in the financial services industry are distinct from its other businesses. The demerger will allow the financial services business to have higher leverage for its growth and unlock value for Reliance Industries’ shareholders.
Reliance Industries shares were trading 0.63 per cent higher at Rs 2,435.10 on BSE following the development. The stock is at a low of 5.43 per cent year-to-date. As per publicly available data with Trendlyne, an average target price of Rs 2,834 suggests a 16 per cent potential upside for stocks.
A recent Bloomberg report suggested that Reliance Industries may go for a public listing of Jio Financial Services as soon as October. The Mukesh Ambani-led company is reportedly in talks with regulators to secure necessary approvals for the market debut of its digital financial services unit. Jefferies, a foreign brokerage, had earlier expected Reliance Industries to receive all necessary approvals for listing the shares of Jio Financial Services by September. JFS will commence lending activities immediately and proceed with regulatory approvals for life and general insurance and asset management. Regulatory approvals are expected to take about 12-18 months, the brokerage firm added.
The demerger of Reliance Strategic Investments is expected to help Reliance’s financial services business by attracting a wider pool of investors and partners, unlocking value for shareholders, and aiding the company in pursuing a differentiated strategy aligned with the industry-specific risks, market dynamics, and growth trajectory.