Jio Financial shares gain 3% as BofA to invest Rs 18,268 crore in Jio Credit; key details

Jio Financial Services Ltd shares gained 3 per cent in Thursday's trade after the company board approved the execution of a share subscription agreement and a shareholders' agreement involving Jio Credit Ltd and NB Holdings Corporation, a wholly-owned subsidiary of Bank of America Corporation. The agreement is for an investment of up to Rs 18,268.22 crore in Jio Credit Ltd for a stake of 49.90 per cent.

The proposed investment will be made through the subscription of securities of Jio Credit Ltd by way of a preferential issue on a private placement basis. The transaction is subject to statutory and regulatory approvals.

The deal includes up to 4,29,29,760 equity shares with a face value of Rs 10 each, representing 26.50 per cent of the post-issue paid-up equity share capital of Jio Credit Ltd, for cash consideration of up to Rs 6,612.90 crore. It also includes up to 7,56,64,248 warrants for cash consideration of up to Rs 11,655.32 crore. Each warrant can be converted into one fully paid-up equity share of Jio Credit Ltd within 18 months from the date of allotment.

Following the development, shares of Jio Financial rose 3.27 per cent to hit a high of Rs 263.35 on BSE. The stock cut gains and was later trading at Rs 258.45, up 1.35 per cent.

A total of 25 per cent of the consideration payable for the warrants will be paid at the time of subscription, while the balance will be paid at the time of conversion. After the conversion of the warrants, NB Holdings, USA will hold 49.90 per cent of the paid-up equity of Jio Credit Ltd.

The company said the transaction is not a related party transaction and that none of its promoter, promoter group or group companies has any interest in it. The board approval and the proposed investment led to a 3 per cent rise in Jio Financial Services shares in Thursday's trade.