Mukesh Ambani-led Reliance Industries Ltd. on Friday said it will demerge its financial services business into Reliance Strategic Investments Ltd. (RSIL), which will be renamed Jio Financial Services Ltd. (JFS).
Jio Financial Services will be listed on the Indian stock exchanges, India's largest company in terms of market capitalisation says in an exchange filing.
RSIL is currently a wholly-owned subsidiary of RIL and is a RBI-registered non-deposit taking non-banking financial company.
As part of the scheme, shareholders of RIL will receive one equity share of JFSL of face value ₹10 for one fully paid-up equity share of ₹10 held in RIL.
The board has approved the entitlement ratio based on the recommendations of the independent valuer and merchant bankers, the company says.
The investment of RIL in Reliance Industrial Investments and Holdings Limited (RIIHL), which is a part of the financial services undertaking of RIL, will stand transferred to JFSL. RIIHL is the ultimate beneficiary of 6.1% RIL shares through its interest in Petroleum Trust and Reliance Services and Holdings Ltd., the oil-to-telecom conglomerate says.
"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 will be a technology-led business, delivering financial products digitally by leveraging the nation-wide omni-channel presence of Reliance’s consumer businesses," says Mukesh Ambani, chairman and managing director, Reliance Industries.
"JFS is uniquely positioned to capture multiple growth opportunities in financial services bringing millions of Indians into formal financial institutions," Ambani adds.
JFS plans to acquire liquid assets to provide adequate regulatory capital for lending to consumers and merchants, the filing says, adding that it will incubate other financial services verticals such as insurance, payments, digital broking, asset management for at least the next three years of business operations.
The regulatory licences for the key businesses are in place, says RIL.
JFS plans to launch consumer and merchant lending business based on proprietary data analytics to complement and supplement the traditional credit bureau-based underwriting, the company says.
RIL says JFS will continue to evaluate organic growth, joint-venture partnerships as well as inorganic opportunities in insurance, asset management and digital broking segments.
The financial services sector presents a large under-penetrated and growing addressable market, especially for retail and small-business focused product categories, the filing says.
JFS says it will build a business of scale across attractive consumer segments to create value for every stakeholder.
RIL recorded a marginal 0.2% year-on-year rise in its net profit for the July-September quarter at ₹15,512 crore compared with ₹15,479 crore in the same period last year.
The company's consolidated revenue for the quarter was ₹253,497 crore, higher by 32.4% year-on-year, primarily due to higher realisation in oil-to-chemical business as energy prices rose sharply and continued growth across retail and digital services.