Jio Financial Services Valued at $20 Billion in Demerger from Reliance Industries
WHAT YOU SHOULD KNOW
- Jio Financial Services (JFS) has been valued at around $20 billion after its stock price was set at 261.85 rupees in the demerger from Reliance Industries.
- The demerger allows Reliance Industries to expand its presence in the lucrative financial services sector, leveraging its existing non-bank financial company license.
- JFS will likely be included in major Indian indices and is expected to benefit from access to data from Reliance’s telecom and retail businesses, facilitating lending opportunities.
Jio Financial Services (JFS) has been valued at approximately $20 billion following its demerger from Reliance Industries, the conglomerate owned by Indian billionaire Mukesh Ambani. The demerger, announced in October last year, represents Reliance’s strategic move to expand its presence in the financial services sector, leveraging its existing non-bank financial company license. With a valuation of $20 billion, JFS would rank among the top 40 Indian companies by market capitalization, led by Reliance at $233 billion.
In a unique move, the main stock exchanges in India conducted a special hour-long “pre-open call auction” trading session for Reliance to determine the share price of JFS. The stock price was set at 261.85 rupees, surpassing analysts’ expectations, and shareholders will receive one JFS share for each Reliance share they hold. This higher stock price reflects investors’ confidence in JFS’s future performance, given its exposure to Jio’s extensive mobile customer base and substantial holding of Reliance’s treasury shares.
Once listed, JFS is expected to be included in major Indian indices, including the benchmark Nifty 50. Analysts believe that JFS’s access to vast data from Reliance’s telecom and retail businesses will facilitate lending activities. Macquarie Research anticipates that JFS could attain an AAA rating, enabling it to borrow at attractive rates. Despite the recent surge in Reliance shares since the demerger announcement, the stock is still trading higher after the special session, outperforming the broader Nifty 50 index in 2023.
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