Jio Financial Services (JFS) shares increased more than 15% to a new high on Monday following a media report indicating that the company was among the frontrunners in acquiring Paytm’s wallet business. Jio Finance shares surged 16.25% to a record high of ₹295.00 on the BSE. Meanwhile, Paytm shares were trapped in a 10% downward circuit at a record low level.
One 97 Communications, Paytm’s parent firm, was in exploratory negotiations with a few investors about selling the wallets business. According to insiders, Jio Financial Services and HDFC Bank were among the early bidders for Paytm’s wallet business.
Paytm shares fell after the Reserve Bank of India (RBI) prohibited Paytm Payments Bank (PPBL) from carrying out certain operations following a system audit report and subsequent compliance validation report by external auditors.
New Outlook by Jio in Financial Services
Jio Financial Services is a subsidiary of Reliance Industries, which is managed by billionaire Mukesh Ambani. The non-banking finance company (NBFC) conducts its financial services business through consumer-facing subsidiaries Jio Finance Limited (JFL), Jio Insurance Broking Limited (JIBL), and Jio Payment Solutions Limited (JPSL), as well as a joint venture called Jio Payments Bank Limited.
The business collaborated with BlackRock, the world’s largest asset manager, to establish an asset management company with a $300 million joint investment. Jio Financial Services stated that their joint venture, Jio BlackRock, will provide “tech-enabled access to affordable, innovative investment solutions for millions of investors in India.”
JFS recorded a consolidated net profit of ₹293.82 crore for the quarter ended December, a decline of 56% from ₹668.18 crore in the preceding quarter (Q2FY24). In Q3FY24, the company’s consolidated revenue from operations decreased 32% sequentially to ₹413.61 crore from ₹608.04 crore.
JFS separated from Reliance Industries in 2023 and debuted on the stock markets on August 21 of that year.
Solid Reply from Paytm
Paytm, the fintech leader, stated on Monday that it is not in negotiations with any company about selling its wallet business. Amidst media speculation over the sale of the Paytm wallet business to Mukesh Ambani’s Reliance-owned Jio Financial Services, a Paytm source has stated that the company is not in talks with anybody about the sale.
According to sources, the ailing fintech was in preliminary discussions with many organizations, including HDFC Bank and Jio Financial Services. Seven prominent fintech and banking officials familiar with the subject confirmed that Paytm has been in communication with Jio Financial Services since November of last year.
Paytm found itself in major difficulties after the Reserve Bank of India ordered Paytm Payments Bank to stop accepting deposits or enabling top-ups after February 29. The RBI is considering revoking the bank’s license as early as March.
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