Jio Financial Services (BOM:543940, NSE:JIOFIN) and Bank of America have agreed to form a joint venture under which Bank of America will acquire up to a 49.9% stake in Jio Credit, Jio Financial's wholly owned lending subsidiary, for up to 182.7 billion Indian rupees.
Bank of America, through its wholly-owned subsidiary NB Holdings, will make the investment via a preferential issue of equity shares and warrants, subject to applicable statutory and regulatory approvals, according to a joint announcement on Thursday.
NB Holdings will subscribe to up to 42.9 million equity shares for up to 66.1 billion rupees, representing 26.5% of Jio Credit's post-issue paid-up equity share capital.
It will also subscribe to up to 75.7 million warrants for up to 116.6 billion rupees.
Each warrant will be convertible into one fully paid-up equity share within 18 months of allotment, with 25% of the consideration payable upon subscription and the balance upon conversion.
Jio Credit will remain a subsidiary of Jio Financial and continue to be consolidated in its financial statements.
The partnership will combine Jio Financial's digital reach and local market expertise with Bank of America's global financial services capabilities, including expertise in governance, risk management, and technology.
Jio Credit's existing management team will continue to lead its strategy and operations, while the joint venture's board will have equal representation from Jio Financial and Bank of America.
Jio Credit, which began operations two years ago, had assets under management of about $3.2 billion as of June 30.
Jio Financial Chairman Mukesh Ambani called the partnership a "pivotal milestone" in the company's mission to expand access to credit, while Bank of America CEO Brian Moynihan said the investment reflected confidence in India's growth prospects.
