Reliance Industries shareholders, creditors approve demerger of financial services biz

Reliance Industries on Thursday informed stock exchanges that that the oil-to-telecom giant has secured the approval of equity shareholders, secured creditors and non-secured creditors to demerge Reliance Strategic Investments (RSIL) from Reliance Industries (RIL). Votes were 99.9994 per cent in the favour of resolution in the case of unsecured creditors and equity shareholders; and 100 per cent in the case of secured creditors.

The demerger of Jio Financial Services is seen helping the financial services business of the oil-to-telecom major to attract different sets of investors, strategic partners and lenders having a specific interests in the financial services business.

Reliance Industries carried financial services business through its subsidiaries and joint ventures. It noted that 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 told its creditors and shareholders ahead of the e-voting.

A financial services company can have a higher leverage for its growth; and unlock the value of the demerged undertaking for the shareholders of Reliance Industries.

Following the development, Reliance Industries shares were trading 0.63 per cent higher at Rs 2,435.10 on BSE. The stock is down 5.43 per cent year-to-date. An average target price of Rs 2,834, as per publicly available data with Trendlyne, suggests a 16 per cent potential upside for the stock.

Recently, a Bloomberg report suggested that Reliance Industries might go for public listing of Jio Financial Services as soon as October. The report suggested that the Mukesh Ambani-led company was in talks with regulators to secure the necessary approvals for the market debut of its digital financial services unit.

Jefferies, a foreign brokerage, in April, expected Reliance Industries to get all necessary approvals for listing of shares of Jio Financial Services (JFS) by September. JFS will commence lending activities immediately and proceed for regulatory approvals for asset management, life and general insurance, the foreign brokerage said, adding that regulatory approvals are expected to take 12-18 months.

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