Jio Financial shares skyrocket 15%: Is Reliance acquiring crisis-hit Paytm?
What's the story
Jio Financial Services (JFS) shares jumped almost 15% on Monday as reports emerged that the demerged firm from Reliance Industries is looking to acquire Paytm's wallet business.
The Hindu Business Line reported that Paytm is in preliminary discussions with potential investors to sell its wallet business. HDFC Bank is also said to be in the fray.
Paytm shares, on the other hand, dropped again today, marking a 43% decline in the last three trading sessions.
Key developments
Talks started before RBI's fresh curbs on Paytm Payments Bank
Reportedly, Paytm has been in talks with JFS since November. Its talks with HDFC Bank also began before Reserve Bank of India (RBI) banned Paytm Payments Bank.
These dealings are reported to be part of a bailout plan.
The RBI is reportedly considering revoking Paytm Payments Bank's license due to potential money laundering and know-your-customer (KYC) violations.
However, Paytm has denied allegations that the company or its founder and CEO are under investigation for money laundering charges.
Growing business
JFS already has multiple joint ventures and subsidiaries
JFS operates a joint venture called Jio Payments Bank and runs financial services through subsidiaries like Jio Insurance Broking, Jio Payment Solutions, and Jio Finance.
It has also applied for mutual fund activities in partnership with BlackRock Financial Management and is awaiting in-principle approval.
Both JFS and BlackRock plan to invest $150 million in the joint venture.
Today, the shares of JFS closed at Rs. 292.40—15.2% higher than their closing last Friday.
Emerging player
JFS has introduced payment solutions and services
JFS, which separated from Reliance Industries last year, owns Jio Payments Bank.
The bank has re-platformed to offer digital savings accounts and bill payments through a network of 2,400 business correspondents.
It has also introduced debit cards.
In payment solutions sector, Jio has piloted Jio Voice box, enabled Jio phones with UPI, and is implementing QR codes.
JFS subsidiaries include Jio Finance, Jio Insurance Broking, Jio Payments Bank, Jio Payments Solutions, a proposed AMC, and a leasing subsidiary.