Billionaire Mukesh Ambani’s Reliance Industries Ltd announced on Friday that it would spin off its financial services arm and take it public.
In a statement, the company said Reliance shareholders will receive one share of Jio Financial Services Ltd (JFSL) for each share they hold in the company.
JFSL plans to launch consumer and merchant lending businesses while continuing to evaluate organic growth, joint venture partnerships as well as inorganic opportunities in the insurance, asset management and digital brokerage segments , did he declare.
“The Board of Directors of Reliance Industries Ltd (RIL), at its meeting held today (Friday), approved a plan of arrangement between RIL, Reliance Strategic Investments Limited (RSIL) and their respective shareholders and creditors in under which RIL will spin off its financial services business into RSIL (to be renamed Jio Financial Services Limited or JFSL),” he said.
JFSL would be listed on Indian stock exchanges.
RSIL is currently a wholly-owned subsidiary of RIL and a non-bank systemically important non-depository finance company registered with the RBI.
“Pursuant to the scheme, shareholders of RIL will receive one share of capital in JFSL with a nominal value of Rs 10 for each fully paid up share of capital of Rs 10 held in RIL,” the statement said.
In addition, RIL’s investment in Reliance Industrial Investments and Holdings Limited (RIIHL), part of RIL’s financial services business, will be transferred to JFSL.
JFSL will acquire liquid assets to provide adequate regulatory capital for consumer and merchant lending, as well as to incubate other financial services verticals such as insurance, payments, digital brokerage and asset management for at least the next 3 years of business.
“Regulatory licenses for key companies are in place,” he said.
JFS’s structure allows it to partner with strategic or financial investors with an enhanced strategic focus to support the company’s growth drivers, the company said.
The transaction is subject to customary statutory and regulatory approvals, including from NCLT, stock exchanges, SEBI and RBI.
Commenting on the split, Mukesh Ambani, President and CEO of RIL, said, “JFS will be a truly transformational, customer-centric and digitally-driven financial services company, delivering financial services products that are simple, affordable, innovative and intuitive to all Indians. “
JFS, he said, will be a technology-driven company, delivering financial products digitally by leveraging Reliance’s nationwide consumer business omnichannel presence.
“JFS is uniquely positioned to seize multiple growth opportunities in financial services, bringing millions of Indians into formal financial institutions,” he said.
India’s financial services sector presents a large addressable, under-penetrated and growing market, especially for consumer and small business product categories.
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