Jio Financial Services Debuts: Targeting Shadow Lending Growth, eyes shadow lending growth

Jio Financial, Reliance subsidiary, valued at $20B, enters Mumbai stock market, targeting India's shadow lending sector.

Jio Financial, Reliance subsidiary, debuts in Mumbai, valued at $20B. Limited revenue. Ambani’s growth vision with BlackRock partnership, targeting non-banking finance prominence.

Jio Financial Services Ltd., a subsidiary of Reliance Industries Ltd., is preparing for its debut on the Mumbai stock exchange, with investors showing optimism about its potential to tap into India’s shadow lending sector. Despite having limited revenue at the moment, the company has been valued at $20 billion in a recent special trading session. Mukesh Ambani, the billionaire owner of Reliance Industries, mentioned in the company’s annual report that Jio Financial Services would unlock value for shareholders and provide an opportunity for them to participate in a new growth platform. Existing shareholders of Reliance will receive one share of Jio Financial for each share they own in Reliance.

Although Jio Financial currently has a small revenue stream, it owns a 6.1% stake in Reliance and has already announced a partnership with BlackRock Inc. to establish an Indian asset management venture. Market analysts anticipate that the company could leverage Reliance’s broader presence in digital and retail businesses, potentially positioning itself as one of India’s major non-banking finance companies. This strategic positioning could help Mukesh Ambani build an empire similar to China’s Alibaba Group Holding Ltd. and Tencent Holdings Ltd.

There is considerable interest in Jio Financial’s listing, with high-net worth individuals and retail investors expressing enthusiasm due to its affiliation with the Reliance group. Market experts like Ambareesh Baliga believe that the stock might debut at a higher price than its discovered valuation. Despite the spinoff, Jio Financial’s shares continue to be part of key stock market indices, such as the benchmark Sensex and Nifty 50 Indexes, with their value remaining stable. This situation is a result of new regulations introduced by Indian stock exchanges to handle mergers and acquisitions more effectively.

Analysts point out that Jio Financial has significant growth potential, particularly in expanding credit offerings to individual borrowers. Anita Gandhi, a strategist at Arihant Capital Markets Ltd., highlights the possibilities for the company’s expansion in this regard.

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