In a strategic move to tap into India’s rapidly growing financial services sector, Jio Financial Services, a part of the Reliance Group led by billionaire Mukesh Ambani, has joined forces with U.S.-based BlackRock Inc. The two companies are set to form a 50:50 joint venture, aiming to launch asset management services in India.
According to a statement released on Wednesday, both Jio Financial Services and BlackRock are planning an initial investment of $150 million each into the joint venture. The collaboration comes in the wake of Jio Financial Services’ recent demerger from Reliance Industries, which has already been valued at nearly $20 billion by the markets. However, it is essential to note that the venture is yet to establish its presence in the country’s rapidly expanding financial services domain.
“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,” stated Hitesh Sethia, CEO of JFS, in the announcement.
India’s asset management industry has witnessed significant growth in recent years, amassing a substantial 44.3 trillion Indian rupees ($540.4 billion) in assets under management. The proposed joint venture aims to introduce a “digital-first” offering, subject to regulatory approvals, although no specific timeline for the commencement of operations has been provided.
For BlackRock, this represents a second attempt to enter India’s asset management industry, after exiting an earlier joint venture with local financial firm DSP Group back in 2018. BlackRock’s Chairman and CEO, Larry Fink, expressed enthusiasm about the partnership, describing it as a pivotal move for the company as they strive to expand their footprint in India.
Despite the impressive growth, India’s financial investment product penetration remains relatively low compared to the size of its economy. A report by local brokerage house AngelOne, released in May, revealed that the ratio of mutual fund assets under management to the country’s gross domestic product stands at 16%, significantly lower than the global average of 63%.
The joint venture between Jio Financial Services and BlackRock aims to leverage each other’s strengths and expertise to bridge this gap and provide innovative investment solutions to the Indian market. With the potential to revolutionise the asset management landscape in India, the partnership holds promise in diversifying and expanding investment opportunities for Indian consumers.
Both companies are optimistic about the venture’s prospects and await regulatory approvals before embarking on their journey to reshape India’s financial services sector with a forward-looking digital approach.
