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Business News/ Markets / Stock Markets/  Jio Financial seeks shareholder nod to up foreign investments to up to 49%
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Jio Financial seeks shareholder nod to up foreign investments to up to 49%

The board has already approved foreign equity investments of up to 49%. As of 31 March, foreign investors held a 19.45% stake in the company. Core investment companies are non-banking financial companies holding not less than 90% of their net assets in group companies.

Jio Financial Services to seek shareholder nod for foreign investments through equity: Report Photographer: Dhiraj Singh/Bloomberg (Bloomberg)Premium
Jio Financial Services to seek shareholder nod for foreign investments through equity: Report Photographer: Dhiraj Singh/Bloomberg (Bloomberg)

Jio Financial Services on Thursday said it has sought shareholder approval to increase the share of foreign investments in its equity capital to up to 49% post-conversion into a core investment company (CIC).

This comes after the board on 27 December approved foreign investments — including foreign portfolio investments — of up to 49%. As of 31 March, foreign investors held a 19.45% stake in the company. Core investment companies are non-banking financial companies (NBFCs) holding not less than 90% of their net assets in the form of investment in equity shares, preference shares, bonds, debentures, debt or loans in group companies.

Also Read: Jio Financial Services shares spike 5% after company announces JV with BlackRock

According to the company, under the Foreign Exchange Management (non-debt instruments) Rules, raising the limit of foreign investments to up to 49% requires approval by way of a special resolution. Such resolutions need at least 75% shareholder votes in favour to sail through.

“As per the provisions of the Foreign Exchange Management (Non-debt Instruments) Rules and the Foreign Direct Investment (FDI) policy, foreign investment in a CIC is permitted under the government approval route," it said in a postal ballot notice available on the stock exchanges.

The Reserve Bank of India (RBI) had, while granting its approval for change in the shareholding pattern of the company under the scheme for demerger from Reliance Industries Ltd, asked the company to meet eligibility criteria for a core investment company and apply for conversion to NBFC-CIC (non-banking financial company - core investment company). This, the RBI had said, must happen within six months of the date of the scheme becoming effective or three months of the date of listing of the equity shares, whichever is earlier.

Also Read: Jio Financial Services Q4 results: Net profit jumps 6% QoQ to 310.6 crore, net interest income at 280.7 crore

“..the company has submitted an application for conversion of the company from NBFC to core investment company," said the postal ballot notice.

The e-voting will begin at 9 am on May 24, and conclude at 5 pm on June 22, according to information provided by the firm in the exchange notice. The resolutions, if approved, shall be deemed to have been passed on the last date of e-voting, that is, June 22, the company said.

On Thursday, Jio Financial said that the approval would be subject to “all applicable statutory, regulatory compliances and approvals…including but not limited to requisite approvals from the Department of Economic Affairs, Ministry of Finance… permission and receipt of certificate of registration from the Reserve Bank of India as core investment company…"

Also Read: Bajaj Finance vs Jio Financial: Which stock should you buy after Q4 results?

Stock of Jio Financial Services on the BSE rose as much as 5.2% in intraday trade before settling at 367.85, 2.9% higher than the previous close.

Jio Financial Services made its stock market debut on 21 August, 2023. For the quarter ended March, its net profit grew 6% sequentially to 311 crore. The company's consolidated net profit jumped manyfold, from 31 crore in the previous fiscal year to 1,605 crore in FY24.

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ABOUT THE AUTHOR
Shayan Ghosh
Shayan Ghosh leads the BFSI coverage at Mint, reporting on traditional banks, shadow banks and the central bank. He has over 13 years of experience in financial journalism. Based in Mint’s Mumbai bureau since 2018, he tracks interest rate movements and its impact on companies and the broader economy. His interests also include the distressed debt market, especially as India’s bankruptcy law attempts recoveries of billions worth of toxic assets.
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Published: 23 May 2024, 01:21 PM IST
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