Reliance Industries shares jump after financial services arm's demerger date fixed

Shares of Reliance Industries (RIL) jumped over 4% to hit a new 52-week high on the BSE in Monday's trade, after the energy-to-telecom conglomerate set July 20 as the date for the demerger of its financial services arm Reliance Strategic Investments, which would later be renamed Jio Financial Services (JFSL),

After receiving regulatory approval for the demerger last month, board members fixed the date at a board meeting on Friday. RIL informed the exchanges of the decision on Saturday, July 8.

The 36 lakh shareholders of RIL, the largest firm by market capitalization in India, will benefit from the demerger since it will create value for them. According to the plan, each share of RIL that an investor owns will receive one share of Jio Financial. In the past three months, the stock has already increased 13%.

In a regulatory filing, RIL stated that "In accordance with the terms of the Scheme, Thursday, July 20, 2023, has been fixed as the Record Date for the purpose of determining the equity shareholders of the Company entitled to receive the Resulting Company New Equity Shares," adding that the demerger scheme's effective date is July 1.

Background of the matter

Reliance approved the demerger of Jio Financial Services, the company's financial services division, in October 2022. Jio Financial Services will purchase liquid assets through the demerger scheme in order to incubate other financial services verticals like insurance, payments, digital broking, and asset management for at least the next three years of business operations and to provide adequate regulatory capital for lending to consumers, merchants, etc.

While announcing the demerger, Reliance chairman said Reliance chairman Mukesh Ambani had said, "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."