Reliance Industries Limited i.e. RIL's Financial Services Business is going to be demerged. The demerger of Reliance Industries and Reliance Strategic Investments (RSIL) has received the approval of creditors and shareholders. The demerger will be done through a share-swap arrangement.
In a regulatory filing, RIL said 99.9994% unsecured creditors and equity shareholders voted in favor of the demerger. Talking about secured creditors, 100% of the creditors voted in favor. Post demerger, Reliance Strategic Investments will be renamed as Jio Financial Services Limited.
The new company may be listed on the stock exchange by October. Shareholders of RIL will get one share of Jio Financial Services for every share they hold. Last year, Reliance Industries announced plans to separate its financial services business into a separate entity and subsequently list it on the stock exchanges.
The turnover of the financial services business as on March 31, 2022 was Rs 1,387 crore. And KV Kamath will be the non-executive chairman of the new company. Market watchers believe that the decision is positive for existing shareholders and could lead to disruption of the NBFC segment from FY25.
Jio Financial Services plans to start consumer and merchant lending business. Global financial services giant Macquarie in its report last year termed Reliance's financial services business as a major threat to Paytm and other fintech companies in terms of market growth.
Jio Financial Services will stand out from most fintechs because it has access to massive amounts of data. Jio can process and analyze this data in real time to offer financial services like Alibaba, Amazon, Apple.
After the demerger, Jio Financial Services could become the fifth largest financial services company in the country. Reliance Industries already has an NBFC license, which can be leveraged for consumer or merchant lending.
Reliance's financial services business includes Reliance Industrial Investments and Holdings Limited, Reliance Payment Solutions Limited; Jio Payments Bank Limited; Reliance Retail Finance Limited; Geo Information Aggregator Services Limited; and is an investment in Reliance Retail Insurance Broking Limited.