Jio Financial and BlackRock Join Hands For Wealth Management & Broking Business

Jio Financial Services, The financial subsidiary of Reliance Industries, witnessed a significant surge of 5% during today’s intraday session, reaching Rs.371.95 per share. This increase follows the company’s announcement, made through an exchange filing on Monday, regarding the signing of an agreement to establish a 50:50 joint venture with BlackRock. 

What Has Been Said?

“BlackRock, Inc., and BlackRock Advisors Singapore Pte have signed an agreement with the company to form a 50:50 JV to undertake wealth business, including the incorporation of a wealth management company and subsequent incorporation of a brokerage company in India,” said Jio Financial in filing to the exchanges.

Previous Agreements:

Last Year in July 2023, Jio Financial Services and BlackRock announced a 50:50 joint venture with a USD 150 million investment each to venture into the asset management sector in India. Jio Financial Services submitted its application to the Securities and Exchange Board of India on October 19. According to Sebi’s status report as of December 31, 2023, the application is “under process.”

Outlook for this JV:

The Broking and Wealth  Management sector in India has sustained notable growth over the past few years with a rapid surge in the new demat accounts from the past few years.

According to a report, institutional platforms manage over 50 per cent of the $1-1.2 trillion of financial assets owned by India’s high-networth individuals. While a third of it is managed by banks, 12-14% of the assets are managed by Indian wealth managers. The newly formed JV may compete with bank-led wealth management firms and firms like BNP Paribas Wealth Management, Nuvama, and Avendus. 

Projections indicate promising prospects for the wealth management industry, with expectations of a substantial rise in high-net-worth individuals (HNIs) and ultra-high-net-worth individuals (UHNIs) in India. Over the past five years, individuals with incomes surpassing Rs. 1 crore have seen a 15% increase, with forecasts suggesting their numbers will reach 3.40 lakhs in the next five years, contributing to the sector’s expansion.

Conclusions: The future outlook for this looks positive and promising as well. Though there would be competition in both the lines, the streets expect the newly demerged Jio and the Largest Asset Management Company in the world to achieve significant heights and the stock price of Jio Financial Services was also up by 5% in the early morning trading session.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.