Jio Financial Eyes Fresh Licence From SEBI To Enter The Mutual Fund Space

Putting behind all speculation of taking the acquisition route to enter the mutual fund space, the fintech arm of the oil-to-telecom conglomerate Reliance Industries, Jio Financial Services, has filed an application with the Securities and Exchange Board of India (SEBI) for a mutual fund licence.

The application status is currently under consideration by the market regulator, as per an updated list issued by SEBI on December 31. The application filed by Jio Financial Services (JFS), in partnership with BlackRock, seeks in-principle approval for a mutual funds licence. 

As per the document, the application was filed by JFS and BlackRock on October 19 last year, just three months after Jio Financial Services announced a joint venture (JV) with the investment giant to foray into the Indian asset management space.

With this, it becomes clear that the combined entity has gone for a new licence rather than taking the acquisition route to enter the homegrown mutual fund industry. 

It is pertinent to note that SEBI approves MF applications in two steps. The companies, first, get in-principle approval, enabling them to set up an asset management company. This is followed by the final nod, which comes after a few months.

This comes at a time when SEBI has sped up the approval process for MF licences. Since March last year, the market regulator has approved applications submitted by names such as Zerodha, Old Bridge Capital Management, Helios Capital, et al. 

The entry of JFS in the AMC space could heighten fears among Indian startups as the conglomerate-backed entity possesses deep pockets and the experience of BlackRock in the space. Both Jio Financial and BlackRock have set aside an initial investment of $150 Mn each to launch Jio BlackRock and aim to disrupt the Indian AMC space with its ‘digital-first offerings’ for investors in the country.

This also comes at a time when the competition appears to be heating up in the Indian AMC space. In October last year, Zerodha, in partnership with invest tech platform smallcase, launched its three maiden mutual funds. Prior to that, in September, Groww also secured approval from SEBI to launch its first index fund. 

Not just this, it has now emerged that fintech firms Groww, Angel One and PhonePe have emerged as leading distributors of mutual fund products. The three platforms together accounted for nearly half of the 3 Mn new SIPs opened in November last year.

At the heart of this is the reportedly INR 49.04 Lakh Cr Indian mutual fund industry. MF products have emerged as a favourable offering among local retail investors and have witnessed a compounded annual growth rate (CAGR) of over 25% since the beginning of the pandemic.