Reliance Industries To Spin Off And List Jio Financial Services

Reliance Industries Ltd. said it will spin off its financial services business and list it on the Indian exchanges.

The board approved a scheme of arrangement among RIL, Reliance
Strategic Investments Ltd. and their respective shareholders and creditors to demerge its financial services undertaking into Reliance Strategic Investments, the company said in an exchange filing.

Reliance Strategic Investments will be renamed Jio Financial Services Ltd. The scheme does not involve payment of any cash consideration for the
demerger, it added.

RSIL is currently a wholly owned subsidiary of RIL and is a Reserve Bank of India-registered non-deposit taking systemically important non-banking financial company.

The scheme is subject to regulatory and shareholders' approval.

The retail-to-refining company's shareholders will receive one share of Jio Financial Services for each held in RIL.

• RIL plans to list Jio Financial Services on the stock exchanges.

• Jio Financial will acquire liquid assets to provide adequate regulatory capital for lending to consumers, merchants.

• It will also incubate other verticals such as insurance, payments, digital broking, asset management.

Jio Financial Services will continue to acquire these liquid assets for at least the next three years of business operations. Regulatory licences for key businesses are already in, the company said in its statement.

The new entity plans to launch consumer and merchant lending business based on proprietary data analytics to complement and supplement the traditional credit bureau-based underwriting.

Jio Financial Services will continue to evaluate organic growth, joint-venture partnerships as well as inorganic opportunities in insurance, asset management and digital broking segments.

According to RIL, its shareholding in Reliance Industrial Investments and Holdings Ltd. will stand transferred to Jio Financial Services. Currently, RIIHL holds 6.1% stake in RIL through its interest in Petroleum Trust and Reliance Services and Holdings Ltd.

India's fintechs have attracted considerable interest among institutional investors, owing to the largely unpenetrated market available to them. Apart from new age companies, industry-backed lenders such as Mahindra Financial Services Ltd. have also announced their digital lending foray this year.

Morgan Stanley India Co. and Citigroup Global Markets India Pvt. have provided a fairness opinion on the entitlement ratio recommended by KPMG Valuation Services LLP. Citi, Morgan Stanley and Goldman Sachs are acting as financial advisers and Khaitan & Co is legal adviser to the proposed scheme of arrangement.