Jio Financial Services To Buy SBI’s Stake In Jio Payments Bank

SUMMARY

JFS, which currently owns 82.17% of the paid-up equity share capital of Jio Payments Bank Ltd (JPBL), will acquire SBI’s stake for INR 104.54 Cr

JPBL was set up in a 77:23 partnership between Reliance Industries and SBI in 2016

SBI said in its exchange filing that JPBL’s net worth stood at INR 104.26 Cr as of November 11, 2024

Fintech company Jio Financial Services (JFS) is acquiring the entire stake of the State Bank of India (SBI) in its subsidiary Jio Payments Bank.

JFS, which currently owns 82.17% of the paid-up equity share capital of Jio Payments Bank Ltd (JPBL), will acquire SBI’s stake for INR 104.54 Cr. The transaction will see JFS buying 7.91 Lakh equity shares of the bank for INR 13.22 apiece.

“The board of directors of the company, at its meeting held today, have approved acquisition of 7.91 Lakh equity shares of JPBL from SBI for an aggregate consideration of INR 104.54 Cr. Post this acquisition, JPBL will become a wholly owned subsidiary of the company,” JFS said in an exchange filing.

Meanwhile, SBI said in its exchange filing that JPBL’s net worth stood at INR 104.26 Cr as of November 11, 2024.

The acquisition will be subject to regulatory approval from the Reserve Bank of India. JFS expects the acquisition to be completed within 45 days of receiving the receipt of approval from the RBI.

JPBL was set up in a 77:23 partnership between Reliance Industries and SBI in 2016.

This is the second time in the last year or so when JFS has increased its stake in its banking subsidiary. In August 2024, JFS increased its stake in JPBL from 78.95% by purchasing 6.8 Cr equity shares of the banking arm for INR 68 Cr from SBI.

For context, a payments bank provides basic banking services like deposits, withdrawals, remittances, and payments to underbanked and unbanked populations by offering small savings accounts and facilitating digital transactions.

Airtel Payments Bank, Fino Payments Bank, and NSDL Payments Bank are among the other payments banks operational in the country.

In its Q3 investor presentation, JFS said that its payments bank subsidiary had 1.89 Mn CASA customers, i.e. customers with either current or saving accounts. Back then, it said that it was expanding its bank representative network as well. During the quarter under review, JPBL had 7,300 representatives.

In its investor call for the quarter, the company said that its two payment verticals – JPBL and Jio Payment Solutions have emerged as “key levers for deep customer engagement, as well as strategic levers for creating distribution strength by leveraging the group ecosystem”.

On the financial front, JFS’ consolidated net profit rose 0.3% to INR 294.78 Cr in Q3 FY25 from INR 293.82 Cr in the year-ago quarter. Revenue from operations rose 5.7% to INR 438.35 Cr during the quarter under review from INR 414.33 Cr in Q3 FY24.

Besides its payment solutions’ business, the company is also firming up plans to disrupt the wealth management and brokerage space. After signing a joint venture (JV) with investment giant BlackRock to float a mutual fund joint venture (JV), Jio BlackRock Asset Management, the duo recently infused INR 117 Cr in the venture.

In a filing with the exchanges on January 21, JFS said that 5.85 Cr shares each have been allotted to the two companies at INR 10 each.

Shares of JFS ended Tuesday’s (March 4) trading session 2.69% higher at INR 206.35. The stock touched an all-time low at INR 198.60 during intraday trading on Monday.