BlackRock and Ambani's Jio Financial explore private credit venture in India: report

BlackRock Inc., the world’s largest asset manager, is in discussions with Mukesh Ambani’s Jio Financial Services Ltd. to launch a private credit venture, aiming to tap into the growing direct lending market in India, Bloomberg reported quoting sources on Wednesday.

The proposed 50-50 joint venture would focus on providing loans to a wide range of businesses, from large corporations to startups.

If the deal proceeds, this will mark BlackRock’s third partnership with Ambani’s Jio, following their joint ventures in asset management and stock brokerage services in India.

India’s growing private credit landscape

India is emerging as a promising market for private credit in Asia.

The country has attracted interest from global firms such as Apollo Global Management, Cerberus Capital Management, and Varde Partners, drawn by the increasing demand for alternative financing solutions.

In the first half of 2024, private credit investments in India surged to a record $6 billion, according to a report from EY.

The demand for private credit in India spans both established enterprises and young startups seeking growth capital.

Analysts see this segment as filling the gap left by traditional banks and shadow lending institutions, which have reduced their exposure to riskier sectors amid regulatory challenges.

Celia Yan, BlackRock’s head of APAC private credit, recently noted the rising opportunities in India for lending to large enterprises with multiple subsidiaries, as well as providing capital to startups.

“India’s private credit market offers unique openings for growth, especially in non-traditional lending,” Yan said last month.

BlackRock's expanding presence in India

If the venture materializes, it would represent another strategic step for BlackRock in expanding its presence in India’s financial sector.

The New York-based firm has already appointed Maheshwar Nataraj to lead its private credit operations in India, underscoring its long-term commitment to the market.

Jio Financial, led by veteran banker K.V. Kamath, brings complementary expertise to the proposed partnership.

The company already operates as a shadow bank, providing home loans and lending against mutual fund investments.

Challenges and potential ahead

Although the discussions are progressing, the companies have not yet finalized the details, and there is still a chance the venture may not proceed. Both BlackRock and Jio Financial declined to comment on the matter.

The expansion of India’s private credit market aligns with the global growth of the $1.7 trillion private credit industry, which has gained momentum since the global financial crisis.

Major firms, including Blackstone Inc., are actively seeking opportunities in markets like India to diversify their lending portfolios.

While the Indian government and financial regulators have taken steps to improve the environment for private credit, challenges remain.

Market volatility, regulatory uncertainty, and the ability to manage credit risks are factors that both firms will need to address in their new venture.