RIL to spin off and list its financial services business as Jio Financial Services Ltd

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Bombay : Mukesh Ambani’s Reliance Industries Ltd (RIL) announced on Friday that it will spin off its financial services business and list it separately on the stock exchange as Jio Financial Services Ltd, in a bid to tap the growing demand for financial services from the new era for retail and small business customers, the company said in a statement.

“The Board of Directors of RILat its meeting held today, approved a plan of arrangement between RIL, Reliance Strategic Investments Limited (RSIL) and their respective shareholders and creditors pursuant to which RIL will spin off its financial services business into RSIL, which will be renamed Jio Financial Services Limited (JFSL),” the statement read.

RSIL is currently a wholly owned subsidiary of RIL and is a systemically important non-depository NBFC registered with the RBI.

RIL shareholders will receive one JFSL share for one share.

“Jio Financial Services will be a truly transformational, customer-centric and digitally driven financial services company, delivering simple, affordable, innovative and intuitive financial services products to all Indians. JFS will be a technology-driven company, offering financial products digitally by leveraging the nationwide omnichannel presence of Reliance’s consumer businesses. JFS is uniquely positioned to seize multiple growth opportunities in financial services, bringing millions of Indians into formal financial institutions,” said Mukesh Ambani, President and CEO of RIL.

RIL added that through the spin-off program, Jio Financial Services will acquire liquid assets to provide adequate regulatory capital for consumer lending, merchant lending, etc., and to incubate other financial services verticals such as insurance, payments, digital brokerage, asset management for at least the next three years of business. Regulatory licenses for key activities are in place, the company said.

JFS plans to launch a consumer and merchant lending business based on proprietary data analytics to complement and supplement traditional credit bureau-based underwriting. JFS will continue to evaluate organic growth, joint venture partnerships as well as inorganic opportunities in the insurance, asset management and digital brokerage segments.

“With centuries-old growth drivers, the Indian financial services industry is poised to undergo a digital transformation. The sector presents a large addressable, under-tapped and growing market, especially for retail and small business oriented product categories. JFSL and its subsidiaries (JFS) will leverage Reliance’s technology capability and focus on digital delivery of financial products to democratize access to financial services for 1.4 billion Indians,” the statement said.

The financial services industry’s current footprint reaches more than 20 million consumers, RIL said.

Citi, Morgan Stanley and Goldman Sachs are acting as financial advisors and Khaitan & Co is acting as legal advisor in connection with the proposed transaction.

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