RIL has convened a meeting of creditors and shareholders on 2 May 2023 to seek their approvals for demerging its financial services business into a separate entity and subsequent listing it on the stock exchanges. The voting will commence on 27 April 2023 and end on 1 May 2023, RIL said in a regulatory update.RIL's board had approved the demerger in November 2022. At present, Reliance Strategic Investments (RSIL) is a wholly-owned subsidiary of RIL and is an RBI-registered non-deposit-taking systemically important non-banking financial company. Post demerger, RSIL will be rechristened to Jio Financial Services (JFSL).
According to the contours of the deal, RIL will issue one share of the demerged company with a value of Rs 10 each for every one share held in RIL. The appointed date for the demerger is 31 March 2023. Upon the scheme becoming effective, the name of the demerged firm will be changed to JFSL and the new firm will be listed on the Indian bourses.
Kundapur Vaman Kamath, former MD and CEO of ICICI Bank, was named non-executive chairman of JFSL.
Further growth and expansion of the financial services business would require differentiated strategy aligned to its industry specific risks, market dynamics and growth trajectory, RIL said on the rationale of the demerger.
The creation of an independent company would help in focusing exclusively and exploring for opportunities in the financial services sector. Further, the independent company can attract different sets of investors, strategic partners, lenders and other stakeholders having a specific interest in the financial services business, it said.
The demerger will unlock value for RIL's shareholders, it added.
Revenue for the financial year 2021-22, of the financial services business of the company is Rs 1,387 crore and the resulting company is Rs 148.61 crore.
Financial Services Business includes Reliance Industrial Investments and Holdings Limited (RIIHL); Reliance Payment Solutions Limited; Jio Payments Bank Limited; Reliance Retail Finance Limited; Jio Information Aggregator Services Limited; and Reliance Retail Insurance Broking Limited.
On the rationale of spinning off of its financial services business into a separate entity, RIL said, Further growth and expansion of the Financial Services Business would require differentiated strategy aligned to its industry specific risks, market dynamics and growth trajectory. The nature and competition involved in the financial services business is distinct from the other businesses and it is capable of attracting a different set of investors, strategic partners, lenders and other stakeholders.
Reliance Industries had also said that creation of an independent company focusing exclusively on financial services can help attract different sets of investors, strategic partners, lenders and other stakeholders having a specific interest in the financial services business; a financial services company can have a higher leverage (as compared to the demerged company) for its growth; and unlocking the value of the demerged undertaking for the shareholders of the demerged company.
RIL is India's largest private sector company. Its activities span hydrocarbon exploration and production, petroleum refining and marketing, petrochemicals, renewables (solar and hydrogen), retail and digital services.
On a consolidated basis, net profit of RIL declined 2.8% to Rs 15,792 crore on 17.4% increase in net sales to Rs 2,17,164 crore in Q3 December 2022 over Q3 December 2021.
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