Jio Financial Services and BlackRock apply for SEBI Mutual Fund License, triggering a stock surge

Jio Financial Services (JFS) shares rose 1.7% on 4-Jan-2024 as Reliance Industries' arm partnered with global giant BlackRock Financial Management to launch a joint mutual fund company. Securities and Exchange Board of India (SEBI) is currently considering their application filed on 19 October 2023 for in-principle approval.

Jio Financial Services Ltd, led by Mukesh Ambani and BlackRock announced their 50:50 joint venture in July 2023 backed by a $150 million investment each. This collaboration aims to bring forth affordable and innovative investment solutions by leveraging JFS's technological capabilities and market expertise combined with BlackRock's extensive proficiency in investment and risk management. As of 31 December 2023, SEBI's status report indicates that Jio's mutual fund application is "under process," positioning JFS and BlackRock among the applicants awaiting approval.

Impact on JFS Share

In early trade on 4 December JFS shares were trading at ₹238.2 on NSE up 1.58% compared to the previous session's closing price. Pending final approval, the launch of Jio Financial Services-BlackRock Asset Management Co is anticipated to be a disruptor in India's $580 billion mutual fund industry. BlackRock is making a comeback in India's asset management sector by teaming up with Jio Financial Services. This marks their return after ending a joint venture with DSP, where they sold their 40% stake to their partner about five years ago.

The initial investment of $150 million from each partner highlights the commitment to providing tech-enabled and affordable investment solutions to Indian investors. With 45 players in a highly competitive mutual fund industry managing assets worth ₹50 trillion, Jio-BlackRock alliance aims to carve a distinctive niche in the market.

Stock Performance

Since its listing on 21 August at ₹262 on National Stock Exchange, Jio Financial Service shares have faced a modest decline of 5.69% closing at ₹234.75 on 3 January. In the past one month stock is up 4.56% including today’s gain. Technically stock is coming out from consolidation zone.

Jio Financial Services in its second-quarter results recorded a double profit of ₹668 crore compared to the previous quarter. This update comes with JFS's first financial report since being listed on stock exchanges. consolidated profit after tax for the three months ending on 30 September rose to ₹668 from ₹332 crore in the April-June quarter. Total revenue also surged by 48% to ₹608 crore.