Vast, new entrants to vast, evolving sectors
Vishrut A.
Alumni- IMT Hyderabad | Management Trainee -O2C at G4S India | Tally Essentials Level 1 "A" grade | Tally Essentials Level 2 "A+" grade | Tally Essentials Level 3 certified
The most valued company, in the Indian financial system #relianceindustrieslimited, will be having its annual general meeting (AGM) this month. Among the many announcements, the reinvention of the fintech services of the conglomerate is expected to make the most waves in the stock exchange.?
Reliance Strategic Investments Ltd., a constituent of the #financial services businesses of Reliance Industries, like Reliance Industrial Investments and Holdings, and Reliance Payment Solutions, will be demerging to become Jio Financial Services (JFS) and foraying into non-deposit microlending. The demerger would make JFS the fifth-largest Non-Banking Finance Company (NBFC) in the industry, with a market capitalisation of Rs.1.7 lakh crore (USD 21.25 billion) as compared to market leader, Bajaj Capital, worth Rs. 4.6 lakh crore. The services will target businesses and merchants before facilitating customers to pay utility bills, make insurance payments, and asset management.
Experts recall Reliance Group Chairman Mukesh Ambani having traditionally avoided leverage in new business ventures. As such, a leverage-free NBFC Jio Financial Services Ltd, together with the high bond rating of its parent, is projected by analysts to acquire market share rapidly with low-interest lending. Using the vast funds, the NBFC can develop the technological capabilities of JioMoney to bring the group more market share in the fast-growing e-wallet industry.
Jio Financial Services will also be forming a joint venture, Jio Blackrock, with international asset management major Blackrock group, which has assets under management (AUM) at USD 11 trillion. The parent companies will jointly infuse capital of USD 150 million each to Jio Blackrock. The expertise from #blackrock indicates the joint venture will likely be an #assetmanagement company. According to the industry regulator, the Association of Mutual Funds in India (AMFI), the cumulative AUM in the Indian mutual fund industry has grown from Rs. 8.11 trillion on 30 June 2013 to Rs. 44.39 trillion on 30 June 2023-a ten-fold spike. With substantial capital availability, oil-to-telecom conglomerate Reliance Industries and Blackrock have many options for Jio Blackrock to gain market share in the fast-ballooning Indian mutual fund scene.
One such initial market entry strategy that analysts believe is the coupling of the e-wallet service of Reliance Payments Solutions Ltd., JioMoney, with financial advising and #assetallocation software platform of Blackrock, ALLADIN.?
ALLADIN, which stands for Asset, Liability, Debt, and Derivative Investment Network, has served retail customers of Blackrock Inc. by providing a risk analytics and portfolio management platform. ALLADIN is a tool that fund managers at Blackrock and its retail clientele utilise to design portfolios and has an impressive track record.
The potential of Jio Financial Services Ltd. (JFSL), the re-entry of Blackrock into the Indian mutual fund industry through Jio Blackrock, and the availability of ALLADIN to retail investors in India as an integrated service with JioMoney pave the way for massive disruption in the non-deposit lending, mutual fund, and e-wallet industries.
Senior Analyst- Financial Operation ( Arcesium India) |PGDM Finance (2020-22)| CFA/FRM L1 Candidate
1 年Very well analysed....