𝗝𝗶𝗼-𝗕𝗹𝗮𝗰𝗸𝗥𝗼𝗰𝗸
𝗝𝗶𝗼-𝗕𝗹𝗮𝗰𝗸𝗥𝗼𝗰𝗸: 𝗔 𝗕𝗲𝗵𝗲𝗺𝗼𝘁𝗵 𝗶𝗻 𝘁𝗵𝗲 𝗠𝗮𝗸𝗶𝗻𝗴
✍🏻 Multiple analysts and fund managers are discounting Jio Fin as a stock to stay away from due to intense competition in the financial services space.
But I have a different opinion.
✍🏻 Let’s first understand the major players behind the partnership and bit of history.
✍🏻 Jio Fin comes from the stable of Reliance and headed by Isha Ambani – rumoured to be Mr. Ambani’s favourite. Assisting her is the legendary KV Kamath, a former chief of the BRICS NDB Bank.
Isha Ambani has stellar credentials – she’s a graduate of Yale and a postgraduate from Stanford. Those are literally the best business schools in the world.
✍🏻 KV Kamath was the successor to Narayana Murthy at Infosys and was the main architect behind ICICI Bank.
There’s no way Mr. Ambani is going to let her daughter fail, and will put his full force and support in making sure Jio Fin takes off the ground and flourishes.
✍🏻 The partnership with BlackRock is intended to help the firm go global once it finds its footing in India.
Now let’s look at BlackRock – the world’s largest asset management company (AMC).
It manages $9.42 trillion worth of assets, or 3x the GDP of India.
✍🏻 Their managers are on the board of every major corporation in the U.S influencing decisions.
An unparalleled corporate network.
✍🏻 When BlackRock started up in a single room office with 8 people in 1988, the AMC landscape in the US was already very mature. The biggest AMCs during that time:
1. Goldman Sachs
2. T.Rowe Price
3. Vanguard
4. State Street
5. SS&C Advent
6. American Century
7. Bessemer Trust
Even in such a crowded space, founder Larry Fink and team quadrupled their assets within ONE YEAR.
✍🏻 In 2006, just 18 years after founding, BlackRock crossed $1 trillion in AUM.
It’s safe to say that they know a thing or two about scaling up in the AM space.
Now let’s come back to Jio Fin. Their lending portfolio as of Jan 2024 are identified as follows:
1. Secured lending for electronics with a Device-as-A-Service (DaAS) model
2. Supply chain financing for trade & commerce
3. Lending against shares & mutual funds
✍🏻 All three are well risk-diversified and untapped for deep penetration.
Subsidiaries:
Insurance Broking – Non-brainer. Currently tied up with 27 insurance companies.
Payment Solutions – Consolidate ops under JPSL.
Reliance Strategic Holdings Ltd – Assets of ₹4.9 lakh crores ($6 billion) in 17.2 crores RIL shares
All looking solid.
✍🏻 The Jio-BlackRock JV partnership would be initially restricted to their mutual fund business for which the company has already filed applications with SEBI.
Initial investment will be a total of $300 million & will have its own management team overseen by the same BoD of JioFin.
There’s no question of efficiencies in both the companies as they’re both listed in their respective countries and have a great track record.
✍🏻 This will be BlackRock’s second outing in India after a failed partnership with DSP, and they’re set to make it count.
Jio Fin has ready access to a massive database of Jio Telecom users who are the largest pool of data consumers in the world.
✍🏻 Customer acquisition, stratification and service would be extremely cost-effective for Jio Fin vis-a-vis other AMCs/financial companies.
Not to mention the fact that they may even apply for banking and insurance license in the future making it fully backward integrated with the full might of the Reliance Group behind it.
✍🏻 It’s a very real possibility.
In summary, the opportunity of Jio Fin confluences with what Jio Telecom had in 2016, when everyone discounted their ability to perform in a saturated market – remember the jokes about how users will have the Jio SIM for data and another for calling?
Well, we all know how that worked out.
www.aasthafintech.com
