The Indian billionaire highlighted during Reliance’s annual general meeting that JFS intends to further widen its financial services with global partners including Blackrock.
Jio Financial Services Ltd (India, Bombay: 543940), a subsidiary of Mukesh Ambani-run Indian conglomerate Reliance Industries Ltd (India, Bombay: 500325), is officially expected to enter the merchant lending and insurance industries. The announcement was made by Ambani during the Reliance Industries’ annual general meeting on Monday, August 28. Notably, Ambani highlighted that Jio Financial Services will tap into digital technology to offer a simple, yet smart life, general, and health insurance products.
“JFS will massively increase financial services penetration by transforming and modernizing them with a digital-first approach that simplifies financial products, reduces the cost of service, and expands reach to every citizen through easily accessible digital channels,” Ambani noted.
The company has a target of offering seamless financial services to thousands of SMEs, merchants, and self-employed entrepreneurs.
“JFS plans to democratize financial services for 1.42 billion Indians, giving them access to simple, affordable, innovative, and intuitive products and services,” he added.
Currently, Jio Financial Services owns approximately 6.1 percent of Reliance Industries and has been operating on the principle of mutual benefits. In addition, JFS has substantial backing from the world’s leading asset management company BlackRock Inc (NYSE: BLK), thus making its diversification into insurance services strategic for its future growth prospects.
“There is an unprecedented opportunity to transform the asset management industry by introducing a full-service tech-enabled asset manager with affordable and transparent investment products to meet the needs of every segment of society,” said Larry Fink, Chairman, and chief executive of BlackRock, at Reliance’s event on Monday.
Jio Financial Services Entering the Insurance Industry
Jio Financial Services spun off from Reliance Industries last month, whereby its stock price was set to debut at 261.85 rupees at a valuation of about 1.7 trillion Indian rupees, which is approximately $20.5 billion. According to the latest stock market data, Jio Financial Services stock closed Monday trading at 211.65 Indian rupees, down approximately 15 percent in the past five days. With about 6.3 billion shares outstanding, Jio Financial Services was valued at about 1.35 trillion Indian rupees.
Reportedly, Jio Financial Services already has a broking business in place with over 17 insurance partners. As a result, CLSA recently announced that it will maintain its ‘buy’ rating on Reliance, but raised the target price to Rs 3,060 per share.
The future growth success rate for JFS is expected to exponentially increase in the coming months as more insurance policyholders purchase the company’s products. Furthermore, Ambani noted that Reliance has capitalized Jio Financial Services with a net worth of Rs 1,20,000 crore.
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