Reliance Jio Demerger: Investors need to be aware of Reliance Jio demerger – all you need to know about ril jio financial demerger
What is changing in Reliance Industries?
Reliance has announced the merger of its financial services business with Reliance Strategic Investments as part of its group restructuring. The name of the subsidiary company has been changed to Jio Financial Services. It will soon be listed in the capital market. The divestiture of the financial services business includes a 6.1% treasury share of Reliance Industries.
What’s in store for Reliance shareholders?
Under the demerger arrangement shareholders of Reliance will get one share of the demerged company for each share they hold in the group. Reliance has fixed July 20 as the record date for determining the shareholders eligible for allotment of shares of the demerged entity. Record date is the day or date when a company finalizes its records to identify eligible shareholders for company proceedings such as demerger. Hence, if an investor bought Reliance shares on July 20, that investor will be eligible to get Jio Financial shares. The shareholding pattern in Jio will be similar to that of Reliance Industries.
Why is there a special stock market session for Reliance?
This will be a special pre-open session aimed at discovering the stock prices of Reliance Industries. It will exclude the financial services business post-separation. This will be the difference between Reliance’s share price received during this session and the day before Reliance’s ex-demerger date on July 19. This will include Jio Financial.
Why is Jio Financial being included in major indices?
This is the first time that the indices will include a spin-off component after the NSE in April introduced new rules on the functioning of Nifty indices to implement company decisions involving demergers. Apart from the Nifty index, Jio Financial will also be included in other indices. Jio will be the 51st stock on the Nifty as part of the arrangement. The objective of including a spin-off component in indices is to reduce churn among index constituents as a result of demergers. This affects the passive funds. Hitherto, spin-off entities were excluded from the indices after approval of the scheme of demerger arrangement. As a result passive funds were forced to change the weighting of index components.
Does Jio Financial continue to be included in Nifty due to demerger?
Not so at all. The spin-off business will be removed from the index after the third day of its actual listing. Jio will be listed after the entire demerger process is over. Although the listing date is yet to be announced, the market expects Jio to start trading normally in September or October.
What will happen to Reliance’s futures and options contracts due to demerger?
Reliance’s equity derivative contracts will expire one day prior to the record date. This means derivatives contracts for July, August and September on Reliance will expire on July 19. A new contract for this expiry will be introduced in the capital market from July 20.
What is the value of Jio Financial share?
Various analysts have valued Jio Financial at between 160 and 200 each. According to Axis Securities, the post-merger company is valuing Jio Financial Services at Rs 1,08,597 crore treasury stock valuation. With the company’s total outstanding shares at 6.77 billion shares, Jio shares will be valued at 160 per share. Brokerage Nuwama has estimated the value of the new business company at 168 each. Centrum Broking said that. That company Rs. Expect to list in the range of 157 – 190 per share. Whereas JP Morgan has an implied value of 189 for this business. 179 per share for the company based on Jeffery’s estimates.
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