Reliance spin-off Jio Financial valued at $20 billion, above estimates

The stock was trading about 1.4% higher at 10.16 a.m. IST after the special session.

Jio Financial Services (JFS), the demerged financial services unit of Indian conglomerate Reliance Industries, was valued at around $20 billion after its stock price was set at a much higher-than-expected 261.85 rupees on Thursday.

The demerger by billionaire Mukesh Ambani-controlled Reliance is considered the oil-to-retail conglomerate’s way of expanding in the lucrative financial services sector, especially as it has a non-bank financial company licence.

In a first, India’s main stock exchanges held a special hour-long ”pre-open call auction” trading session for Reliance on Thursday to determine JFS’ share price.

The price was determined as 261.85 rupees, or the difference between 2,841.85 rupees, Reliance’s closing price on Wednesday, and 2,580 rupees, its price at the end of the special session.

JFS’s stock price is higher than analysts’ estimate of 160 rupees to 190 rupees. Stockholders will get one JFS share for each Reliance share they hold.

The stock will be included in major Indian indices, including the benchmark Nifty 50, but will not trade until it is listed, the date for which Reliance will likely set at its upcoming annual general meeting.

Reliance announced the demerger of Reliance Strategic Investments, which will be renamed JFS, last October.

JFS’ access to vast amounts of data from Reliance’s telecom and retail businesses will also help it kick-start lending, analysts have said. Macquarie Research said JFS would likely be an AAA-rated entity that could borrow at attractive rates.

Late on Wednesday, Reliance Strategic Investments reported a standalone net profit after tax of 1.45 billion rupees ($17.7 million) for April-June, and a total income of 2.15 billion rupees.

Reliance had surged about 8% from July 8, when it set the record date for the demerger, through Wednesday.

The stock was trading about 1.4% higher at 10.16 a.m. IST after the special session. It is up 11.6% so far this year, outpacing a 9.5% rise in the Nifty 50.

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