{"id":4483,"date":"2023-07-19T11:03:14","date_gmt":"2023-07-19T11:03:14","guid":{"rendered":"https:\/\/www.paytmmoney.com\/blog\/?p=4483"},"modified":"2023-07-20T10:13:06","modified_gmt":"2023-07-20T10:13:06","slug":"reliance-jio-financial-services-demerger-what-mean-for-ril-shareholders","status":"publish","type":"post","link":"https:\/\/www.paytmmoney.com\/blog\/reliance-jio-financial-services-demerger-what-mean-for-ril-shareholders\/","title":{"rendered":"Reliance-Jio Financial Services Demerger: What does it mean for RIL shareholders?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Reliance Industries recently announced the demerger of its financial services business into Reliance Strategic Investments. RIL has fixed July 20 as the record date to determine eligible shareholders for the allotment of shares of the resulting company.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Reliance Strategic Investments Limited (RSIL; the resulting entity) is a wholly-owned subsidiary of Reliance Industries and an RBI-registered non-banking financial company (NBFC) Post its demerger, it will be renamed to Jio Financial Services (JFS).<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Due to this demerger scheme, 1 additional equity share of Reliance Strategic Investments Ltd. will be allotted for every 1 equity share held in Reliance Industries Ltd<\/span><\/p>\n<h2><strong>What is Jio Financial Services?<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">Jio Financial Services is a financial services company with investments in 6 companies ~\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Reliance Industrial Investments and Holdings (RIIHL),\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Reliance Payment Solutions<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Jio Payments Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Reliance Retail Finance\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Jio Information Aggregator Services\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Reliance Retail Insurance Broking Ltd<\/span><\/li>\n<\/ul>\n<h2><strong>Why was the demerger done?<\/strong><\/h2>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Reliance Industries is India&#8217;s biggest conglomerate with interests in multiple businesses, like digital services, retail, financial services, advanced materials and composites, renewables (solar and hydrogen), exploration &amp; production and oil to chemicals. <\/span><\/li>\n<li style=\"font-weight: 400;\">One among the multiple businesses carried on by the Company is the Financial Services business, which is carried on by the Demerged Company directly and through its subsidiaries and joint ventures.<\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Further growth and expansion of the Financial Services Business would require a differentiated strategy aligned to its industry-specific risks, market dynamics and growth trajectory.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The nature and competition involved in the financial services business is distinct from the other businesses, and it is capable of attracting a different set of investors, strategic partners, lenders and other stakeholders.<\/span><\/li>\n<\/ul>\n<h2><strong>Benefits of the demerger:<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">After the demerger, the Financial Services Business will get the following benefits:<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>(a)<\/strong> Creation of an independent company focusing exclusively on financial services <\/span><span style=\"font-weight: 400;\">and exploring opportunities in the said sector.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>(b)<\/strong> The independent company can attract different sets of investors, strategic <\/span><span style=\"font-weight: 400;\">partners, lenders and other stakeholders having a specific interest in the <\/span><span style=\"font-weight: 400;\">financial services business.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>(c)<\/strong> A financial services company can have higher leverage (as compared to the <\/span><span style=\"font-weight: 400;\">Demerged Company) for its growth<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>(d)<\/strong> Unlocking value of the Demerged Undertaking for the shareholders of the <\/span><span style=\"font-weight: 400;\">Demerged Company.<\/span><\/p>\n<h2><strong>Impact of demerger on Portfolio\/FnO Positions:<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">When a company demerges into one or more new entities, the original company gives its shareholders more shares of demerged companies. In the case of RIL shareholders, 1 equity share of Reliance Strategic Investments Ltd. will be allotted for every 1 equity share held in Reliance Industries Ltd.<\/span><\/p>\n<h2><strong>How is the Buy Average Price calculated post demerger:<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">If you bought a share at Rs.100 and it demerged, what\u2019s the purchase price of the additional equity shares received as per the scheme?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The demerged company will (usually) issue a note, regarding the percentage of Cost of Acquisition of equity shares in Demerged Company and Resulting Company, so this is how you should split your acquisition price.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">RIL has declared the cost of acquisition. It is as follows:<\/span><\/p>\n<p><img decoding=\"async\" class=\"aligncenter wp-image-4487 size-full\" src=\"https:\/\/paytmmoney.wpengine.com\/wp-content\/uploads\/2023\/07\/table_RIL-Jio-Financial-demerger-1.png\" alt=\"\" width=\"570\" height=\"488\" srcset=\"https:\/\/www.paytmmoney.com\/blog\/wp-content\/uploads\/2023\/07\/table_RIL-Jio-Financial-demerger-1.png 570w, https:\/\/www.paytmmoney.com\/blog\/wp-content\/uploads\/2023\/07\/table_RIL-Jio-Financial-demerger-1-300x257.png 300w\" sizes=\"(max-width: 570px) 100vw, 570px\" \/><\/p>\n<p><span style=\"font-weight: 400;\">So if you have bought one share of RIL at Rs 100 before the demerger, then<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">You will have one share of RIL at Rs 95.32 and<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">One share of Reliance Strategic Investments Ltd at Rs 4.68 post the demerger.<\/span><\/li>\n<\/ul>\n<p><strong>Please note that-<\/strong><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The date of purchase of all the demerged shares(RSIL) is the same and the buy average for your existing holdings will be updated once the company declares the cost of acquisition and Reliance Strategic Investments shares are listed in exchanges<\/span><\/li>\n<li style=\"font-weight: 400;\">All F&amp;O Contracts will display the actual expiry date but the contracts will be available to trade till 19-Jul-2023, irrespective of the actual expiry. Derivatives contracts on RIL shall be introduced again (with expiry July 27, 2023, August 31, 2023 and September 28, 2023) from July 20, 2023 being the ex-date of the underlying.<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Source: <a href=\"https:\/\/www.ril.com\/DownloadFiles\/SchemeOfArrangement\/FSB\/Scheme.pdf\">RIL Scheme of arrangement<\/a><\/span><\/p>\n<h2><strong>Special Pre-open Session (SPOS):<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">As RIL has derivatives contracts, the National Stock Exchange will conduct a special pre-open session for Reliance Industries on July 20 to determine the equilibrium price, as the conglomerate is set to demerge its financial services business. In consequence, the new entity(Reliance Strategic Investments), will be temporarily included in the Nifty 50 index on the same day at 10 AM as the 51st entity, said NSE.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">SPOS is to minimise volatility and discover the equilibrium price of securities. Between 9:00 AM to 9:45 AM, orders can be entered, modified and cancelled. Between 9:45 AM to 9:55 AM, orders are matched, trades are confirmed, and the opening price is determined. The last five minutes are used as a buffer period for transition from pre-open to normal market.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Once the price for RIL is derived during the special pre-open session on July 20, a constant price for the spun-off entity (Reliance Strategic Investments) will be derived, which is the difference between the RIL&#8217;s closing price on July 19 (ex-demerger date), and the price derived during the special pre-open session on July 20.\u00a0<\/span><\/p>\n<p><strong>For more details FAQ\u2019s on SPOS-<\/strong><\/p>\n<p><a href=\"https:\/\/www1.nseindia.com\/common\/pdf\/Member_FAQ_on_SpecialPreOpenSession_inCapitalMarketSegment.pdf\"><span style=\"font-weight: 400;\">https:\/\/www1.nseindia.com\/common\/pdf\/Member_FAQ_on_SpecialPreOpenSession_inCapitalMarketSegment.pdf<\/span><\/a><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Disclaimer:<\/strong> <span style=\"font-weight: 400;\">Investments in the securities market are subject to market risks, read all the related documents carefully before investing. This content is purely for information purpose only and in no way to be considered as an advice or recommendation. Paytm Money Ltd SEBI Reg No. Broking \u2013 INZ000240532. NSE (90165), BSE(6707) Regd Office: 136, 1st Floor, Devika Tower, Nehru Place, Delhi \u2013 110019. For complete Terms &amp; Conditions and Disclaimers visit:<\/span><a href=\"https:\/\/www.paytmmoney.com\/stocks\/policies\/terms.\"> <span style=\"font-weight: 400;\">https:\/\/www.paytmmoney.com\/stocks\/policies\/terms.<\/span><\/a> <span style=\"font-weight: 400;\">The securities are quoted as an example and not as a recommendation.<\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Reliance Industries recently announced the demerger of its financial services business into Reliance Strategic Investments. RIL has fixed July 20 as the record date to determine eligible shareholders for the allotment of shares of the resulting company. Reliance Strategic Investments Limited (RSIL; the resulting entity) is a wholly-owned subsidiary of Reliance Industries and an RBI-registered<a href=\"https:\/\/www.paytmmoney.com\/blog\/reliance-jio-financial-services-demerger-what-mean-for-ril-shareholders\/\">Continue reading <span class=\"sr-only\">&#8220;Reliance-Jio Financial Services Demerger: What does it mean for RIL shareholders?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":24,"featured_media":4484,"comment_status":"open","ping_status":"open","sticky":false,"template":"single-classic-ns.php","format":"standard","meta":{"footnotes":""},"categories":[8,6],"tags":[],"class_list":["post-4483","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-announcements","category-personal-finance"],"_links":{"self":[{"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/posts\/4483","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/users\/24"}],"replies":[{"embeddable":true,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/comments?post=4483"}],"version-history":[{"count":0,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/posts\/4483\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/media\/4484"}],"wp:attachment":[{"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/media?parent=4483"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/categories?post=4483"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/tags?post=4483"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}