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The Securities and Exchange Board of India (Sebi) has granted in-principle approval for Jio Financial Services and BlackRock Financial Management Inc to establish a joint venture mutual fund. This approval signifies a crucial step towards the creation of a new financial entity aimed at investment advisory services. The proposed fund will operate under the banner of 'Jio BlackRock Investment Advisers Private Limited,' a joint venture company formed by Reliance Industries' non-banking finance company (NBFC) arm, Jio Financial Services, and BlackRock Advisors Singapore Pte. Ltd.
Sebi's approval, conveyed through a letter dated October 3, is a significant milestone in the formation process. However, the final registration will be granted only after Jio Financial and BlackRock successfully fulfill the requirements outlined in Sebi's letter. The establishment of Jio BlackRock Investment Advisers Private Limited, incorporated on September 6, marks a strategic move for both entities to tap into the burgeoning investment advisory market. The company is dedicated to providing investment advisory services, subject to the necessary regulatory approvals, and received its Certificate of Incorporation from the Ministry of Corporate Affairs on September 7, 2024.
Jio Financial's commitment to the joint venture is underscored by its initial investment of Rs. 3 crore towards the subscription of 30,00,000 equity shares with a face value of Rs. 10/- each. This investment signifies the company's confidence in the venture's potential for success. Furthermore, Jio Financial Services recently obtained approval from the Department of Economic Affairs to increase its aggregate foreign investment limit, encompassing foreign portfolio investors (FPIs), to 49% of its paid-up equity share capital on a fully diluted basis. This move opens up opportunities for greater foreign investment in the company.
The creation of this joint venture signifies Jio Financial's ambition to shape the fintech sector by leveraging India's vast retail lending and payment services market. These businesses align strategically with Reliance's existing digital and retail operations, providing a solid foundation for future growth. Jio Financial Services, which was demerged from Reliance Industries Ltd in July 2023, has established a strong presence in various financial sectors, including secured and unsecured lending, digital equipment leasing, supply chain financing, insurance broking, payment bank, payment aggregator, and payment gateway services.
Despite a recent year-on-year decline in consolidated net profit, attributed to a fall in interest income and an increase in operating expenses, Jio Financial's foray into the mutual fund market through this partnership with BlackRock signifies its commitment to further expanding its reach and financial services offerings. The collaboration with BlackRock, a global leader in investment management, is expected to enhance Jio Financial's expertise and provide access to a wider pool of investors, contributing to the growth of the Indian financial market.
Source: Sebi gives in-principle approval to set up Jio Financial-BlackRock's proposed mutual fund