Jio Financial ups stake in Jio Payments Bank to 82.17%, stock surges

Shares of Jio non-banking financial company (NBFC) Jio Financial Services Ltd (JFS) surged 1.64% to ₹328.90 on the BSE in early trade today after the company increased its stake in Jio Payments Bank to 82.17% for ₹68 crore.

Jio Financial Services, in a stock exchange filing, has said it subscribed to 6.8 crore equity shares of Jio Payments Bank. "The Company has today, at around 1:30 p.m. (IST), subscribed to 6,80,00,000 equity shares of ₹10/- each of Jio Payments Bank (JPBL), for cash at par, aggregating ₹68 crore for its business purposes. Post this investment, the company’s holding in JPBL has increased from 78.95% to 82.17%. The investment is a related party transaction and is on arm’s length basis. None of the company’s promoter, promoter group and group companies have any interest in the above investment."

The company says the approval of the RBI was obtained for the investment and no other governmental or regulatory approvals were required.

Just last week, Jio Financial Services received a nod from the Department of Economic Affairs to raise its foreign investment (including FPIs) in the company to 49% of the paid-up equity share capital on a fully diluted basis.

On August 14, 2024, Mukesh Ambani-led JFS announced the incorporation of a wholly owned subsidiary, Jio Finance Platform and Service Limited. The subsidiary was established to focus on the distribution of financial products and allied services. The development came a month after JFS received approval from the Reserve Bank of India (RBI) for the conversion of the firm from a non-banking financial company (NBFC) to a core investment company (CIC).

At the current level, JFSL shares trade 16.7% lower than its 52-week high of ₹394.70 touched on April 23, 2024, while it surged over 48% from its 52-week low of ₹204.65 hit on October 23, 2023. The NBFC stock has risen 55.67% in the last 12 months; 6.62% in six months; and 40.14% in the calendar year 2024.

JFSL is a holding company for a set of financial services businesses through its subsidiaries Jio Payment Solutions Ltd, Jio Payments Bank and Jio Insurance Broking Ltd, Jio Finance, and Jio Leasing. As a CIC, the company looks to get into the business of retail lending, merchant lending, leasing, payments bank operations, payments solutions and insurance broking. The company has also entered into a joint venture with BlackRock to foray into the asset management business and has sought in-principle approval from SEBI for the same.

For the first quarter ended June 30, 2024, the country’s third largest listed NBFC, after Bajaj Finance and its holding company Bajaj Finserv, reported a 6% year-on-year decline in its net profit at ₹312.63 crore as against ₹331.92 crore in Q1 FY24. Sequentially, the profit increased by 0.6% from ₹310.6 crore in the March quarter of FY24.