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JV with BofA strengthens capital base and growth runway

* On 12th Aug’26, Jio Financial Services (JFSL) announced that Jio Credit (JCL), JFSL’s NBFC-lending subsidiary, has entered into a share subscription agreement and shareholders’ agreement with NB Holdings, a wholly owned subsidiary of Bank of America (BofA), for an investment of up to INR182.7b (USD1.9b), subject to applicable regulatory and statutory approvals. * The investment will initially give BofA a 26.5% stake, which can increase to 49.9% upon full warrant conversion. The partnership will combine JFSL’s digital reach and deep understanding of the Indian market with BofA’s global financial services expertise. The venture aims to leverage technology, innovation, wider access to credit and robust risk-management capabilities to enhance customers’ financial outcomes.

* The investment will enable BofA to deepen its presence in India’s rapidly growing financial services market while leveraging JFSL’s strong local expertise, digital capabilities and differentiated market positioning.

* We view the proposed investment positively, as the INR182.7b capital infusion provides substantial balance sheet headroom for JCL to scale up its lending franchise. The partnership with BofA also adds a strategic value through potential access to global expertise across risk management, technology and product development while strengthening JCL’s competitive positioning in the Indian financial services market.

Structure of the transaction

* JFSL and BofA announced that they have signed a definitive agreement whereby BofA will acquire up to a total of 49.9% interest as a joint venture partner in JFSL’s wholly-owned NBFC lending subsidiary, JCL, through a preferential allotment of equity shares and warrants.

* NB Holdings USA will subscribe to up to 42.9m equity shares of JCL at a face value of INR10 each, representing 26.5% of JCL’s post-issue paid-up capital, for an aggregate consideration of up to INR66.1b.

* In addition, NB Holdings will subscribe to up to 75.7m warrants for an aggregate consideration of INR116.6b. Each warrant will be convertible into one equity share within 18 months of allotment, with 25% of the warrant consideration payable upfront and the remaining 75% upon conversion. On full conversion of the warrants, NB Holdings’ ownership in JCL will increase to 49.9%.

* Pursuant to the transaction, JCL’s Board of Directors will have equal representation from both JFSL and BofA. The existing management team of JCL will continue driving the strategy and operations at the NBFC, and JCL will continue to be consolidated as a subsidiary in JFSL’s financial reporting.

Strong AUM growth in 1QFY27; profitability improving QoQ

* JCL AUM grew ~19% QoQ to ~INR307b as of Jun’26 (vs. ~INR257b in Mar’26). Disbursements grew ~173% YoY/6% QoQ to INR113b. NII stood at INR2.6b (up ~119% YoY) and PAT was INR960m (up ~112% YoY and 35% QoQ).

* Average CoB rose 7bp QoQ to 7.07% (PQ: 7%). Portfolio mix remained balanced, with HL at ~45%, LAS at ~10%, and corporate lending and SME at ~44%. ATS was INR13m in Mortgages and INR11m in LAS. Average tenor was 3.25 years in Corporate/SME.

* CRAR stood at 22.35% with D/E ratio of 3.9x as of Jun’26 (Mar’26: 3x).

* We expect earnings momentum to strengthen every year for JCL, driven by a disciplined scale-up of business and a strong focus on profitability. We expect AUM CAGR of 85% and PAT CAGR of 145% over FY26-FY28E, with RoA/RoE of 1.9%/10.4% in FY28E.

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