Winning Bizness Desk

Mumbai. A phase of merger and demerger has started in the Indian corporate world. The effect of HDFC Twin Merger from Dalal Street was not even over, now the country's largest company Reliance Industries has announced a big demerger. Asia's richest businessman Mukesh Ambani's Reliance Industries said that the record date for the demerger of financial services arm Reliance Strategic Investments has been kept on July 20, which means that the company will be dissolved and the new company that will come out will be named Jio Financial Services Limited (JFSL). After getting the regulator's nod on the demerger last month, the decision was taken in the company's board meeting on Friday. The demerger will unlock value for the 36 lakh-strong share holder base of RIL, India's largest company by market cap. JFSL is expected to become India's fifth largest financier in terms of market cap and will compete directly with companies like Paytm and Bajaj Finance. The combined net worth of RSIL and Financial Services is Rs 280 billion, which includes RIL's 6.1 per cent stake.

Shareholders of RIL will get one share of Jio Financial

As per the plan, the shareholders of RIL will get one share of Jio Financial for every share of RIL. The stock is already up 13 per cent in the last three months and had closed marginally lower at Rs 2,635.45 in Friday's session. RIL said in a regulatory filing that in accordance with the terms of the scheme, a date of July 20 has been fixed for determining the persons entitled to receive new equity shares of the new company that will emerge. The company has also said in the filing that the effective date of the demerger scheme is July 1. Significantly, Financial Services Undertaking has investments in 6 companies Reliance Industrial Investments and Holdings (RIIHL), Reliance Payment Solutions, Jio Payments Bank, Reliance Retail Finance, Jio Information Aggregator Services and Reliance Retail Insurance Broking.

Hitesh Sethia will be CEO and MD

The board also approved the appointment of Hitesh Sethia of McLaren Strategic Ventures as CEO and MD of RSIL for 3 years. Mukesh Ambani's daughter Isha has also been appointed as a non-executive director. Former Union Home Secretary Rajeev Mehrishi and former PNB MD and CEO Sunil Mehta will also join the company as independent directors. RIL has not yet announced the date of the AGM. It is expected that Ambani will present its roadmap before JFSL is listed on the stock exchanges. Earlier it was reported that JFSL may get listed in September, but its official announcement is awaited. Global brokerage firm JP Morgan has estimated Jio Financial's share price at Rs 189, Jefferies at Rs 179, while Centrum Broking has estimated the share price at Rs 157-190.