Jio BlackRock Readies $300 Mn War Chest To Capture Asset Management Space

In its first major announcement since demerger, Jio Financial Services (JFS) has signed a joint venture (JV) with investment giant BlackRock to foray into the Indian asset management space. 

Called Jio BlackRock, the two companies will own a 50% stake each in the newly formed digital-first entity. At the outset, JFS and BlackRock will target an initial investment of $150 Mn each in the JV.

“Jio Financial Services Limited and BlackRock today announced an agreement to form Jio BlackRock, a 50:50 joint venture… to deliver tech-enabled access to affordable, innovative investment solutions for millions of investors in India,” said Reliance Industries in a regulatory filing with the BSE on Wednesday (July 26). 

As per the company, the JV will leverage Jio Financial’s resource base, local market knowledge, digital infrastructure capabilities and execution capabilities to attract more customers to its kitty. On the other hand, BlackRock’s expertise and talent in investment and risk management will enable Jio BlackRock to offer ‘affordable, innovative investment solutions’ to Indian investors.

The newly formed entity will commence operations once it has received necessary regulatory and statutory approvals from concerned authorities. In a statement, Reliance said that Jio BlackRock will have its own management team in the country.

“This is an exciting partnership between JFS and BlackRock, one of the largest and most respected asset management companies globally. The partnership will leverage BlackRock’s deep expertise in investment and risk management along with the technology capability and deep market expertise of JFS to drive digital delivery of products,” said Jio Financial’s president and chief executive officer (CEO) Hitesh Sethia.

Reacting to the development, BlackRock’s chair and head of Asia Pacific (APAC) Rachel Lord said, “… We are very excited to be partnering with JFS to revolutionise India’s asset management industry and transform financial futures. Jio BlackRock will place the combined strength and scale of both of our companies in the hands of millions of investors in India.”

While the details are still scarce, the newly formed JV will offer digital-first investment solutions for investors in the country. In its own words, Jio BlackRock aims to offer ‘affordable’ solutions to investors, and aims to cash in on the ‘rising affluence, favourable demographics, and digital transformation across industries’ in India. 

The development came hours after Reliance Strategic Investments officially changed its name to Jio Financial Services, following the completion of its $20 Bn demerger. Earlier last week, the value of the newly formed JFSL was pegged at INR 261.85 per share in a special pre-open session held on the bourses on July 20.

As a result, the non-banking financial company’s (NBFC’s) market capitalisation stood at INR 1.66 Lakh Cr, the second largest in the country. Meanwhile, the oil-to-telecom conglomerate plans to take the NBFC public in the next few months, even as it embarks on a slew of new announcements in the coming weeks.

In the past, news reports have surfaced that the JFSL could eye a share of the homegrown consumer durable lending, merchant lending, buy-now-pay-later (BNPL), asset management, and insurance markets. As such, it could have a direct impact on the Indian fintech ecosystem, which boasts of a slew of startups in these areas.

This pits JFSL directly in competition with names such as Paytm and PhonePe (in the merchant lending space), and Simpl and CRED in the BNPL space. Jio BlackRock could also thwart Zerodha and smallcase’s plans to foray into asset management space into choppy waters. 

With much expected to unfold over the next few months, it remains to be seen how Indian startups compete with the giant and sustain themselves.