Jio Financial Services, the fintech arm of Reliance Industries, is seeking to make a significant foray into India’s mutual fund space by filing an application with the Securities and Exchange Board of India (SEBI) for a mutual fund license. The application, filed in partnership with investment giant BlackRock, is currently under consideration by SEBI, according to the latest list issued by the market regulator on December 31.
The move clarifies Jio Financial’s strategy, opting for a fresh license rather than pursuing acquisitions to enter the Indian asset management space. The application, submitted on October 19 last year, followed the announcement of a joint venture (JV) between Jio Financial Services and BlackRock.
SEBI’s approval process for mutual fund licenses involves two steps. Companies first seek in-principle approval, enabling the establishment of an asset management company. The final nod is granted after a subsequent evaluation period.
Jio Financial’s entry into the mutual fund arena, particularly in collaboration with BlackRock, raises concerns among Indian startups due to the conglomerate-backed entity’s substantial resources and BlackRock’s extensive experience in the field. Both entities have committed an initial investment of $150 million each for the launch of Jio BlackRock, aiming to disrupt the Indian asset management space with digital-first offerings.
This development coincides with SEBI’s accelerated approval process for mutual fund licenses, with several approvals granted since March last year to entities such as Zerodha, Old Bridge Capital Management, and Helios Capital, among others.
The competition in the Indian asset management space is intensifying, with Zerodha and Groww launching mutual funds in October and September of the previous year, respectively. Additionally, fintech firms Groww, Angel One, and PhonePe have emerged as leading distributors of mutual fund products, collectively accounting for nearly half of the 3 million new SIPs (Systematic Investment Plans) opened in November.
Against the backdrop of the reportedly INR 49.04 Lakh Cr Indian mutual fund industry, the entry of Jio Financial adds another dimension to the evolving landscape, as mutual fund products continue to attract local retail investors with a compounded annual growth rate (CAGR) of over 25% since the beginning of the pandemic.
