LIC Empowers with 6.66% Stake in Jio Financial Services via Strategic Demerger.

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Life Insurance Corporation (LIC) has made a significant move by acquiring a 6.660% share in Jio Financial Services, a recently demerged financial entity of Reliance Industries. This acquisition marks a strategic decision by LIC, reflecting its confidence in the financial sector.

The acquisition, which came through the demerger of the non-banking financial entity, is particularly noteworthy. It cost LIC 4.68% of the pre-demerged value of Reliance Industries, as indicated in the company’s notice dated July 19.

In response to this development, the shares of Jio Financial Services (JFS) experienced some fluctuations in its maiden trading session following its listing. The stock was initially listed at Rs 265 per share, slightly exceeding its derived price of Rs 261.85 on July 20, the date of the company’s demerger. This shift in value resulted in a correction of JFS’s total market capitalization, which decreased from over Rs 1.68 lakh crore to less than Rs 1.6 lakh crore when trading began.

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It’s important to note that JFS stock is classified as ‘T’ group securities on BSE, which means that intra-day trading is restricted.

Furthermore, JFS shares experienced a second consecutive session of reaching their lower circuit limits on Tuesday, with shares locked at the 5% lower circuit limit of Rs 239.20 on BSE. In the preceding session, shares had also declined by 5% from the discovered price of Rs 261.85.

In addition to acquiring a stake in Reliance Industries, JFS has seen a substantial infusion of liquidity, totaling $2.5 billion, as part of the demerger. This liquidity injection positions JFS to potentially support a loan book ranging from $13 billion to $15 billion, according to foreign brokerage CLSA.

LIC’s strategic investment in Jio Financial Services signifies its commitment to the evolving landscape of the financial industry, highlighting its role as a key player in the sector. This move not only strengthens LIC’s position but also reflects the growing importance of financial services within the broader economy.

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