BlackRock to launch India asset management business with Ambani
Two sides to invest up to $300m in JV to offer digital investment service
BENGALURU — Top global money manager BlackRock has partnered with Jio Financial Services — part of the Reliance group led by India’s richest man, Mukesh Ambani — to launch an asset management business in the country, the companies said on Wednesday.
The 50-50 joint venture called Jio BlackRock will deliver “tech-enabled access to affordable, innovative investment solutions for millions of investors in India,” the partners said in a statement, adding that each company will invest $150 million.
The news comes a week after Jio Financial Services was spun off from parent Reliance Industries at a valuation of about $20 billion, making it one of the largest financial services firms in India.
The firm has been bolstering its top brass, appointing ICICI Bank veteran Hitesh Sethia as CEO and former ICICI Bank head K.V. Kamath as non-executive chairman.
Sethia said in a statement that the JV will “leverage BlackRock’s deep expertise in investment and risk management along with the technology and deep market expertise of Jio Financial Services to drive digital delivery of products.”
The JV comes as rising incomes lead Indians to explore new modes of investment beyond gold and real estate. Assets under management of Indian mutual funds doubled to 44.39 trillion rupees ($542 billion) in the five years to June 2023, the Association of Mutual Funds in India estimates.
Reliance’s deep presence among Indian consumers through its retail and telecom businesses could help the conglomerate accelerate uptake of its financial products.
“We believe RIL’s (Reliance Industries Ltd.’s) significant scale through its retail stores, registered retail consumers of 249 million and a telecom subscriber base of 439 million can enable a strong ramp-up of this (Jio Financial Services) business and drive valuations further,” Nomura analyst Hemang Khanna wrote in a note this month.
But Reliance and BlackRock face strong competition from domestic private banks such as ICICI, HDFC and Kotak Mahindra, as well as startups such as Navi and Groww.
“We do not discount the inherent differences between RIL’s existing businesses and financial services,” Khanna wrote.
The partnership with Jio is BlackRock’s second attempt to establish itself in India’s burgeoning asset management industry. In 2018, the U.S. company exited India after being in business for a decade by selling its 40% stake in an asset management venture to partner DSP Group.
Rachel Lord, head of Asia-Pacific at BlackRock, described India as an “enormously important opportunity” on Wednesday.
“The convergence of rising affluence, favorable demographics and digital transformation across industries is reshaping the market in incredible ways,” she said.
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