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India’s mutual fund industry is set to witness a major shake-up as Jio Financial, a subsidiary of Reliance Industries, and BlackRock, the world’s largest asset manager, have applied for a mutual fund licence with the Securities and Exchange Board of India (Sebi).
The two companies announced a 50:50 joint venture in July 2023, called Jio BlackRock, to enter India’s asset management industry and offer tech-enabled, affordable, and innovative investment solutions to millions of investors in the country.
Jio Financial, which has a presence in banking, insurance, and digital payments, brings its local market knowledge, digital infrastructure capabilities, and robust execution capabilities to the partnership. BlackRock, which manages over $9 trillion in assets globally, brings its deep expertise and talent in investment management, risk management, product excellence, technology, operations, and intellectual capital.
The joint venture aims to transform India’s asset management industry through a digital-first offering and democratise access to investment solutions for investors in India. The partnership will leverage BlackRock’s global investment platform, Aladdin, which provides end-to-end portfolio management, trading, risk, and operations tools.
Jio BlackRock will also benefit from the strong brand value and customer base of Jio, India’s largest telecom operator with over 400 million subscribers, and Reliance Retail, India’s largest retailer with over 12,000 stores.
The joint venture filed the application for MF licence on October 19, 2023 and the current status is ‘under process’, according to Sebi’s website. The company will launch operations post receipt of regulatory and statutory approvals and will have its own management team.
The entry of Jio BlackRock is expected to create a significant impact on the existing players in the mutual fund industry, which has over 40 asset management companies managing over Rs 35 lakh crore in assets as of September 2023. The joint venture will pose a formidable challenge to the incumbents in terms of product innovation, distribution reach, customer acquisition, and cost efficiency.
Jio BlackRock will also tap into the huge potential of the Indian mutual fund market, which is still underpenetrated compared to the global average. According to a report by CRISIL and AMFI, the mutual fund industry’s assets under management (AUM) to GDP ratio was 14% as of March 2023, much lower than the global average of 63%. The report also projected that the industry’s AUM will grow at a compound annual growth rate (CAGR) of 18% to reach Rs 70 lakh crore by March 2026.
Jio BlackRock is poised to become a game-changer in India’s mutual fund industry and offer a new dimension of financial well-being to the Indian investors.
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