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LIC acquires a 6.660% stake in Jio Financial Services Ltd through the demerger

by Koushik Gope
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Yes, that is correct. Life Insurance Corporation of India (LIC) has acquired a 6.660% stake in Jio Financial Services Limited (JFSL) through a demerger. The demerger of JFSL from Reliance Industries Limited (RIL) was completed on July 20, 2023. LIC acquired the stake by subscribing to fresh equity shares issued by JFSL. The cost of the acquisition was 4.68% of the pre-demerged cost of RIL.

JFSL is a non-banking financial company (NBFC) that offers a range of financial services, including digital lending, payments, and insurance. The company has a strong customer base of over 100 million users. LIC’s investment in JFSL is seen as a strategic move to gain exposure to the growing digital lending market in India.

The demerger of JFSL from RIL was part of the latter’s plan to focus on its core businesses of oil and gas, retail, and telecommunications. The demerger also allowed JFSL to raise capital from the public markets and become a more independent entity.

LIC’s investment in JFSL is a positive development for the company. It will help JFSL to expand its operations and reach a wider customer base. It will also help LIC to diversify its investment portfolio and reduce its dependence on the traditional insurance business.

Here are some of the reasons why LIC might have acquired a stake in JFSL:

  • To gain exposure to the growing digital lending market in India.
  • To diversify its investment portfolio and reduce its dependence on the traditional insurance business.
  • To partner with a strong financial services company with a large customer base.
  • To support the growth of JFSL and its mission to provide financial services to the masses.

It is too early to say what the long-term impact of LIC’s investment in JFSL will be. However, it is a positive development for both companies and could help them to achieve their respective goals.

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