Jio Financial Shares Rise After BlackRock JV Announcement

(CTN News) – A partnership between Jio Financial Services and global asset manager BlackRock to enter the wealth management and stock broking business has been well received by investors, resulting in the company’s stock rising as much as five percent on Tuesday. It ended the day at Rs 362.7, up 2.4% from its closing price the previous day.

The entry of Mukesh Ambani’s Jio Financial into the two new segments comes at a time when nearly three million new demat accounts are being opened on a monthly basis.

Both the Reliance spinoff and the US-based asset manager have already announced plans to enter the over Rs 50 trillion mutual fund (MF) business.

Jio Financial Services Limited

A brokerage firm will be incorporated by the JV following the launch of its wealth management firm.

As per a report by Jefferies, institutional platforms manage more than 50 percent of the $1-1.2 trillion in financial assets owned by India’s high net-worth individuals (HNIs).

It is expected that Jio Financial will focus its efforts on capturing new customers among the growing segment of high-net-worth individuals in India. In spite of this, some argue that the new venture will not result in any price disruption — a strategy that was employed by Reliance Industries (RIL) when it entered the telecom business.

It is expected that there will be little further disruption in either of the two new business segments because of the intense competition, low pricing models, and tight regulatory framework.

Jio Financial, however, will be able to leverage BlackRock’s expertise in investment management along with the parent company’s extensive national reach.

In the investment management market, BlackRock, the world’s largest asset manager with assets of over $10 trillion, has a strong brand pull and a strong digital presence.

In addition to 360One, Nuvama, Kotak Wealth, and Avendus, the newly formed JV may compete with well-established private wealth management firms like 360One and Nuvama.

As far as stock broking is concerned, the JV may face competition from discount brokers that account for nearly two-thirds of active clients.

Demerged from RIL last year, Jio Financial Services provides personal loans, insurance brokerage services, and bill payment services. Jio Financials currently has a market capitalization of Rs 2.3 trillion following a 54 percent rally this year.

As part of the company’s quarterly meeting on Friday, the board of directors will approve the financial results for the quarter ended March 31, 2024.

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