BlackRock Inc.'s joint venture with Asia's richest man is expected to stir up competition in India's rapidly growing asset management industry.
BlackRock, the world's biggest asset manager according to the Sovereign Wealth Fund Institute, and Jio Financial Services Ltd. announced an equal stakes joint venture to launch asset management services in India, according to a July 26 press release. The venture, named Jio BlackRock, has a combined investment of $300 million.
Jio Financial, formerly Reliance Strategic Investments Ltd., was recently carved out from India's energy-to-telecommunications conglomerate Reliance Industries Ltd., which is controlled by Mukesh Ambani, the richest Asian on Forbes' billionaires list.
Jio BlackRock marks the global asset manager's return to India's mutual funds market after it exited a joint venture with India's DSP Group in 2018. BlackRock held a 40% stake in DSP BlackRock Investment Managers Pvt. Ltd.
"BlackRock had a good JV with DSP, but they fell off. With Jio's strong customer reach and Blackrock's global AMC expertise, it could be a strong combo and could become a large AMC in a relatively short span of time," said Anand Dama, senior research analyst at Indian wealth manager Emkay Global Financial Services.
Growth economy
Global investors are betting on India's growing economy and a robust banking system. The International Monetary Fund expects India's economy to expand 6.1% in 2023, making the South Asian nation the fastest-growing major economy in the world. IMF expects world economic growth to ease to 3.0% in 2023 from 3.5% in 2022, according to its revised World Economic Outlook report on July 25. The country's benchmark stock indexes — S&P BSE India Sensex 30 Index and NIFTY 50 Index — are currently at all-time high levels.
The asset management business in India is a crowded place with yields under pressure, meaning that Jio BlackRock could initially add to further competition, Dama said. Sentimentally, it could be slightly negative for existing listed players, Dama said.
BlackRock and Jio plan to leverage their scale and technology to deliver affordable and innovative investment solutions for millions of investors in India, according to their press statement.
"India represents an enormously important opportunity. The convergence of rising affluence, favorable demographics, and digital transformation across industries is reshaping the market in incredible ways," said Rachel Lord, chair and head of Asia-Pacific at BlackRock. "We are very excited to be partnering with JFS to revolutionize India's asset management industry and transform financial futures."
BlackRock has 2,400 employees in India working on investments, operations and analytics.