InvestorQ : How will the restructuring of Jio actually benefit the shareholders of the company?
Arti Chavan made post

How will the restructuring of Jio actually benefit the shareholders of the company?

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3 years ago
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The move is basically intended to keep the stock in tune with tomorrow and add more value to the high growth businesses. There are 2 reasons for doing this.

The company announced in its press release, this was likely to turn out to be a very good value proposition for the existing shareholders of RIL as well as potential investors in its new business ventures. Globally, most strategic and financial investors prefer to invest in digital businesses that are light on debt and also on asset size. This ensures rapid growth in ROI without making any compromises on the financial stability of the business. It is this combination that RIL will be betting on to make Jio deliver value by getting long term investors to participate in the Indian digital ecosystem at an early stage. That would surely be a compelling choice for a lot of potential investors.

Secondly, this is more of a futuristic idea. This is an internal restructuring with a view to bet on the big franchises of the future. For the group, the big growth in profits and valuations are already coming from the digital and the retail businesses. This new structure will ensure that most of the debt remains with the core oil and petchem business which continues to derive benefits from the digital foray. At the same time, the new age digital businesses are allowed to grow in an unfettered way. That would certainly make sense to the existing and future investors of Reliance Industries.

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