The newly minted Jio Financial Services (JFS) and the world’s largest asset manager, BlackRock, announced on Wednesday that they will form a joint venture (JV) to launch an asset management company (AMC) – Jio Blackrock. This will be BlackRock’s second innings in India’s mutual fund industry.
Jio BlackRock’ will be a 50:50 joint venture and both entities are targeting an initial investment of $150 million each for the JV, according to a press release.
Rachel Lord, chair and head of APAC at BlackRock, said, “The convergence of rising affluence, favourable demographics, and digital transformation across industries in India is reshaping the market.”
Speaking on this transaction, Hitesh Sethia, President, and CEO of JFS, said, “The partnership will leverage BlackRock’s deep expertise in investment and risk management, along with the technology capability and deep market expertise of JFS.”
According to industry sources, the partnership will rely heavily on BlackRock’s iShares model that houses its index funds. It is among the biggest index fund players in the world, along with Vanguard.
“The joint venture is likely to focus on index funds mostly. With BlackRock’s expertise in technology or module-driven index funds rather than actively-managed funds, along with Jio’s strong customer base, it would be a win-win situation for both players,” said an industry expert.
BlackRock, the world’s largest asset management player, had an AUM (assets under management) of $9.42 trillion as of June 30, 2023.
The global investment giant has 2,400 employees in India. After its acquisition of Merrill Lynch’s asset management operations in 2006, DSP Merrill Lynch was rebranded to DSP BlackRock Investment Managers.
However, in 2018, it sold its 40% stake in the joint venture to DSP, thus marking an exit from India’s MF industry. At the time, reports had pegged the deal value at Rs 5,000 crore.
The DSP-Blackrock split was triggered by a tussle between the two entities to own 100% of the business. While BlackRock had sought to buy out DSP’s 60% stake, DSP eventually had its way given that it was the majority shareholder.
Jio BlackRock will launch operations after receipt of the necessary regulatory and statutory approvals.