LIC's Strategic Power Play, Acquires 6.66 Percent Stake in Jio Financial Services
Unveiling Financial Strategies, LIC's Bold Move Shakes Up Industry Landscape
22 August 2023
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Kunal Tyagi
LIC, a prominent state-run insurance giant, acquires 6.66% stake in Jio Financial Services Ltd. (JFSL) through demerger, expanding its investment portfolio.
The acquisition cost is 4.68% of the pre-demerged cost of Reliance Industries, according to LIC's notice dated July 19.
Despite a subdued market response, JFSL's stock market debut on August 21 saw shares listed at ₹265 on BSE and ₹262 on NSE, with a 5% lower circuit in initial sessions.
In a recent development that has caught the attention of both financial markets and industry insiders, the Life Insurance Corporation of India (LIC), a prominent state-run insurance giant, has made a significant acquisition. LIC announced its acquisition of a 6.66% shareholding in Jio Financial Services Ltd. (JFSL), marking a notable strategic move. This transaction was executed through the demerger of the non-banking financial entity, with the cost of acquisition amounting to 4.68% of the pre-demerged cost of Reliance Industries, as indicated in the company's notice dated July 19.
LIC's involvement in Jio Financial Services is closely intertwined with its existing holdings. As of June 30, 2023, LIC already held a 6.49% stake in Reliance Industries. This indicates a calculated expansion of LIC's investment portfolio, diversifying its interests within the Reliance group. JFSL, formerly known as Reliance Strategic Investments Limited, emerged as the financial arm of Reliance Industries and made its stock market debut on August 21.
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Despite the anticipation surrounding JFSL's market entry, the initial response has been somewhat subdued. The company's share price, after a tepid listing, witnessed a 5% lower circuit for the second consecutive session. JFSL shares were introduced at ₹265 per share on the BSE and ₹262 per share on the NSE, slightly above the discovered price of ₹261.85 per share. For the next 10 trading days, JFSL shares are slated to be part of the "Trade-for-Trade" segment, allowing only delivery-based buying and selling under the T2T Group stock.
As markets gauge the implications of LIC's strategic move and JFSL's market debut, the spotlight is not just on the financial sector, but also on the broader strategies of both LIC and Reliance Industries. At 10:50 am, Jio Financial Services' share price was trading 5% lower at ₹239.20 apiece, while LIC's share price displayed a 0.24% increase at ₹653.40 apiece on the BSE. The impact of this move on the financial landscape and the potential ripple effects on both companies' trajectories will undoubtedly be a subject of keen observation in the days to come.
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