๐๐ถ๐ผ-๐๐น๐ฎ๐ฐ๐ธ๐ฅ๐ผ๐ฐ๐ธ
๐๐ถ๐ผ-๐๐น๐ฎ๐ฐ๐ธ๐ฅ๐ผ๐ฐ๐ธ: ๐ ๐๐ฒ๐ต๐ฒ๐บ๐ผ๐๐ต ๐ถ๐ป ๐๐ต๐ฒ ๐ ๐ฎ๐ธ๐ถ๐ป๐ด
โ๐ป 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.
โ๐ป Letโs first understand the major players behind the partnership and bit of history.
โ๐ป Jio Fin comes from the stable of Reliance and headed by Isha Ambani – rumoured to be Mr. Ambaniโs favourite. Assisting her is the legendary KV Kamath, a former chief of the BRICS NDB Bank.
Isha Ambani has stellar credentials – sheโs a graduate of Yale and a postgraduate from Stanford. Those are literally the best business schools in the world.
โ๐ป KV Kamath was the successor to Narayana Murthy at Infosys and was the main architect behind ICICI Bank.
Thereโs 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.
โ๐ป The partnership with BlackRock is intended to help the firm go global once it finds its footing in India.
Now letโs look at BlackRock – the worldโs largest asset management company (AMC).
It manages $9.42 trillion worth of assets, or 3x the GDP of India.
โ๐ป Their managers are on the board of every major corporation in the U.S influencing decisions.
An unparalleled corporate network.
โ๐ป 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.
โ๐ป In 2006, just 18 years after founding, BlackRock crossed $1 trillion in AUM.
Itโs safe to say that they know a thing or two about scaling up in the AM space.
Now letโs 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
โ๐ป 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 โน4.9 lakh crores ($6 billion) in 17.2 crores RIL shares
All looking solid.
โ๐ป 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.
Thereโs no question of efficiencies in both the companies as theyโre both listed in their respective countries and have a great track record.
โ๐ป This will be BlackRockโs second outing in India after a failed partnership with DSP, and theyโre 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.
โ๐ป 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.
โ๐ป Itโs 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
