Jio Financial Spun off out of Reliance

Stocks
#1

Jio Financial will be separated from Reliance on Thursday through a process called spinning out.

To understand how this will happen, here are 10 key points:

  1. The record date for determining eligibility to receive Jio Financial Services shares is July 20, which falls on Thursday.

  2. Previously, Reliance Industries Limited (RIL) had announced the demerger of Jio Financial Services, with a ratio of 1 equity share of Jio Financial for every 1 fully paid-up equity share held in RIL.

  3. As Jio Financial is being separated from RIL, the share price of RIL will need to be adjusted accordingly.

  4. On Thursday morning, there will be a special session to discover the price of RIL.

  5. Here’s an example to illustrate the process:

    a) Suppose RIL's price in the special session on Thursday is `900.

b) RIL's closing price on Wednesday was `1000.

c) The spun-off business, Jio Financial Services (JFS), will have a price of 100 (1000 - 900).

  6. Once Jio Financial stock is listed, at a later date, it will be removed from the indices three days after listing, subject to specific price conditions. For instance, if Jio Financial lists on day T, it will be delisted from the indices at the end of day T+3.

  7. Concerning the impact on RIL’s Futures and Options (F&O) contracts, based on existing rules, all F&O contracts will expire one day prior to the record date, which is July 19.

  8. Currently, the market is valuing Jio Financial based on the treasury stake that it would own in RIL. Analysts estimate this value to be in the range of Rs. 160-200 per share.

  9. The value of Jio Financial is expected to increase once further details about its business strategy, targets, milestones, etc., are made public.

  10. Market expectations are that the upcoming Annual General Meeting (AGM) will primarily focus on Jio Financial Services.