Bank of America will be acquiring as much as a 49.9% stake in the non-bank lending arm of Jio Financial Services in a ₹182.68 billion ($1.92 billion) deal, as part of the bank’s push into India’s financial sector.
The deal size is about 2.5 times the net worth of Jio Credit. BofA will initially acquire a 26.5 per cent stake in Jio Credit, which can rise to 49.9 per cent upon exercise of the warrants. The transaction is subject to regulatory and statutory approvals. JFS will hold the remaining stake in Jio Credit.
The investment will provide Jio Credit with long-term capital to support loan growth as it expands its lending products, while giving BofA greater participation in India’s growing financial services market, according to Business Insider.
“India is one of the world’s most important growth markets, and this investment reflects our confidence in its future, a market we know well and have supported for decades,” said Brian Moynihan, chair and chief executive officer of Bank of America.
The investment is a pure equity infusion, as BofA does not operate retail banking businesses outside the U.S.
“By combining our digital reach with Bank of America’s global pedigree, we will eliminate friction in credit delivery for all Indians, empowering them to chart a prosperous and inclusive path forward for the entire nation,” Mukesh Ambani, the founder of JFS said.
JFS said Jio Credit is focused on bridging the gap between traditional finance and modern accessibility through its diverse suite of lending products, with ambitions to continue its growth trajectory responsibly by providing borrowing opportunities across existing and new products in India.
This deal comes amid a number of different large foreign investments in Indian banks and non-bank lenders, which are seeing a strong demand for credit and low loan delinquency rates, according to Reuters. Recent deals like this include Japan’s MUFG’a investment in Shriram Finance, Dubai-based bank Emirates NBD’s 60% stake purchase in RBL Bank and Sumitomo Mitsui Financial Group’s investment in Yes Bank.
Jio Financial, which listed in 2023 after a demerger from Indian billionaire Mukesh Ambani’s Reliance Industries, operates businesses such as digital lending, payments, insurance broking and asset management services. The company has entered joint ventures with global firms across a number of its business lines. It offers asset and wealth management services through its joint ventures with BlackRock. It has also entered a joint venture with Germany’s Allianz to offer general and health insurance.