RIL calls for shareholder, creditor meeting to approve demerger of financial services arm

• RIL called for a meeting of shareholders and creditors on May 2 to vote on the demerger of its financial services arm.
• The board of directors of RIL had approved the scheme of arrangement where shareholders of RIL will get one equity share of Jio Financial Services.
• JFS will be a technology-led business, and will leverage the network of Reliance’s consumer businesses, said Mukesh Ambani, chairman of RIL.
  

Billionaire Mukesh Ambani is ready to debut in the world of financial services with Jio Financial Services. JFS will focus on delivering financial products digitally. The first step in this direction has been taken with Reliance Industries Limited (RIL) on Thursday calling for a meeting of equity shareholders, secured and unsecured creditors to vote on the demerger of its financial services arm, Reliance Strategic Investments Limited (RSIL). The meeting will be convened on May 2, said an exchange filing by the company.

The meeting is being called as per an order by the Mumbai Bench of the Hon’ble National Company Law Tribunal dated March 27, 2023, RIL said.

The board of directors of RIL had approved the scheme of arrangement between RIL and RSIL last October. It had also said that RSIL, which will be renamed Jio Financial Services (JFS), will be listed on the Indian stock exchanges.

The shareholders of RIL will receive one equity share of JFS for one equity share of RIL. “The board has approved the entitlement ratio based on the recommendations of the independent valuer and merchant bankers,” RIL had said in a media release in October.

“JFS will be a technology-led business, delivering financial products digitally by leveraging the nation-wide omni channel presence of Reliance’s consumer businesses. JFS is uniquely positioned to capture multiple growth opportunities in financial services bringing millions of Indians into formal financial institutions,” said Mukesh Ambani, chairman and managing director of Reliance Industries, after the board approved the demerger.

The investment of RIL in Reliance Industrial Investments and Holdings (RIIHL), which is a part of the financial services undertaking of RIL, will stand transferred to JFS. RIIHL is the ultimate beneficiary of 6.1% RIL shares through its interest in Petroleum Trust and Reliance Services and Holdings.

The former managing director and chief executive officer of ICICI Bank, KV Kamath, will be the non-executive chairman of JFS. JFS has plans to launch a consumer and merchant lending business based on proprietary data analytics to complement and supplement the traditional credit bureau-based underwriting.

It will continue to evaluate organic growth, joint-venture partnerships as well as inorganic opportunities in insurance, asset management and digital broking segments, the company says.

The company said that JFS will acquire liquid assets to provide adequate regulatory capital for lending to consumers, merchants and incubate other financial services verticals such as insurance, payments, digital broking and asset management for at least the next three years of business operations. The regulatory licenses for the key businesses are in place, the company said.