Jio Financial Services eyes Rs 5K-10K crore via maiden bond issue

Jio Financial Services is in initial discussions with merchant bankers for its inaugural bond issuance, according to market sources.

Mukesh Ambani’s financial services venture is looking to raise between Rs 5,000 crore and Rs 10,000 crore through five-year bonds, which could be during January-March, sources said.
 

“As it is an NBFC (non-banking financial company), coming to the market for the first time, it can’t go too long or too short. The market expects a five-year bond issuance in the last quarter this financial year,” said Venkatakrishnan Srinivasan, founder and managing partner, Rockfort Fincap.
 

The NBFC is undergoing a credit-rating process and obtaining the approvals, according to sources.
 

“Looking at its capitalisation and such a large industrial presence, in all probability, it will get the AAA rating. But so far, there is no rating announced,” said Ajay Manglunia, managing director and head (institutional fixed income), JM Financial.
 

Jio Financial Services doubled its net profit during the second quarter this financial year (Q2FY24) to Rs 668.18 crore from Rs 331.92 crore in Q1FY24 on the back of healthy growth in revenue.
 

The demerged financial arm of Reliance Industries aims to become a full-service financial sector player with operations across retail lending, asset management, insurance broking, and digital payments.
 

The company has announced a 50:50 joint venture with BlackRock for an asset management business. According to the arrangement, the two entities will make an initial investment of $150 million each.
 

Recently, the company got approval from the Reserve Bank of India (RBI) to appoint Isha Ambani, Anshuman Thakur, and Hitesh Sethia director.
 

Market participants said the rate on the bonds might be 15-25 basis points higher than that on Reliance Industries bonds issued earlier this month.

“Reliance is a manufacturing company and this is an NBFC. So typically other AAA-rated NBFCs are at around the 8 per cent handle,” said Manglunia.

Reliance Industries had raised Rs 20,000 crore on November 9 through 10-year bonds at a coupon of 7.79 per cent. It was the largest bond issue by a non-financial Indian firm. The majority of the subscribers were large insurance companies and pension funds.

The erstwhile HDFC had raised Rs 25,000 crore in February before its merger with HDFC Bank through 10-year bonds at a coupon of 7.97 per cent, marking it the largest bond issuance by an Indian company.