Reliance to Foray Into Mutual Funds, Gets SEBI Nod For Jio Financial-BlackRock JV

October 8, 2024 Mutual Fund

Jio Financial Services, the non-banking finance arm of Mukesh Ambani-led Reliance Industries, is set to enter India’s flourishing mutual fund industry. On October 03, 2024, Jio Financial Services received SEBI’s in-principle approval to co-sponsor and set up mutual fund business with BlackRock as its 50:50 joint venture partner. The final approval for the same will be granted by SEBI subject to fulfilment of regulatory requirements. The joint venture, to be known as Jio BlackRock, will entail an initial investment of US$ 150 million each from Jio Financial Services and BlackRock.

Jio BlackRock will aim to ride the remarkable recognition the mutual fund industry has received over the last few years. The sharp rise seen in the Indian equity market in recent years has drawn investors to mutual funds and away from traditional modes of investment such as bank deposits.

The asset under management (AUM) of the Indian mutual fund industry has grown from Rs 25.48 trillion as of August 31, 2019 to Rs 66.70 trillion as of August 31, 2024, a more than 2-fold increase in a span of 5 years. Investments by the SIP mode, the preferred option for a majority of retail investors, have crossed Rs 13.39 trillion as of August 31, 2024.

Buoyed by the rising excitement around mutual funds, numerous new names have set up sponsorship of mutual funds which includes names such as Bajaj Finserv, Zerodha, Navi, Helios Capital, and NJ Asset Management, among others.

About Jio Financial Services

Founded in July 1999, Jio Financial Services was originally a subsidiary of Reliance Industries. It was demerged from the parent company in July 2023 to become an independent entity. The company specialises in loans, insurance broking, payment solutions, and leasing. It is now readying itself to enter the investment advisory, wealth management, and stock broking services business. It operates as an RBI registered non-banking finance company (NBFC) that does not accept public deposits.

About BlackRock

US-based BlackRock Financial Management is a global leader in portfolio management, asset allocation, financial planning, and investment advisory services. As of December 31, 2023, BlackRock managed assets worth US$ 10 trillion. Notably, after the global financial crisis of 2008, BlackRock had replaced Merill Lynch as DSP Mutual Fund’s partner in India. However, it exited the business in 2018 by selling its 40% stake to the partner. The joint venture with Jio Financial Services marks the return of BlackRock in the Indian mutual fund industry.

On the occasion of SEBI’s nod, Rachel Lord, Senior Managing Director and Head of International for BlackRock said, “We are excited by the opportunity to deliver affordable and innovative investment solutions to millions of people in India. With our partner Jio Financial Services, we want to contribute to the country’s evolution from a nation of savers to a nation of investors. Investing is the way for people to reach their financial goals more quickly and to accelerate wealth creation”.

Will Jio BlackRock be able to disrupt the Indian mutual fund industry?

Despite being a new player, Jio succeeded in disrupting the telecom industry by introducing aggressively priced products. Accordingly, some individuals expect it to repeat the history with its foray into the mutual fund space. However, unlike the telecom space where there are only a few incumbents, the mutual fund space is highly competitive with over 40 existing players.

Backed by Reliance’s enormous capital and Jio’s vast distribution network and massive consumer base from its telecom and retail businesses, Jio BlackRock can easily cross-sell investment products such as mutual funds and insurance to existing users. It can also benefit from the decades of asset management expertise of BlackRock. However, this may not necessarily result in market disruption.

To become a significant player in the mutual fund industry Jio BlackRock will have to establish a credible and trustworthy track of superior performance in the coming years with well-established investment processes and risk-management techniques in place. Ultimately, it is the returns and risk mitigation strategies that decide the success of a fund house.

[Read: Should You Invest in Schemes of New Entrants in the Mutual Fund Industry?]

Watch this video to find out the highest return mutual funds in the last 10 years based on SIP returns: