Bank of America Corp. agreed to buy as much as 49.9% of a lending unit of Jio Financial Services Ltd. for about $1.9 billion, giving the second-largest US lender direct access to India's booming economy.
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The Charlotte, North Carolina-based bank will obtain its interest in Jio Credit through an allotment of shares and warrants, according to a statement Wednesday. Jio Credit is a lender in India, overseeing about $3.2 billion of assets at the end of June.
The move gives Bank of America a stronger foothold in the Indian market by investing in one of the fastest-growing financial firms in the region. The purchase also underscores the growing allure of India's financial-services industry, which has been a target of several acquisitions this year.
"India is one of the world's most important growth markets, and this investment reflects our confidence in its future, a market we know well and have supported for decades," Bank of America Chief Executive Officer Brian Moynihan said in the statement.
The transaction, which is subject to regulatory approval, initially gives Bank of America a 26.5% interest in Jio Credit, which can rise to 49.9% upon the exercise of the warrants. The fresh investment will also aid billionaire Mukesh Ambani, who owns Jio Financial, as he expands his firm's reach in the market.
India's financial-services sector has been a target of acquisition interest from global banks, with several Japanese banks buying up equity in local lenders. Jio Credit's board will have equal representation from both Jio Financial Services and Bank of America, the companies said.
"By combining our digital reach with Bank of America's global pedigree, we will eliminate friction in credit delivery for all Indians, empowering them to chart a prosperous and inclusive path forward for the entire nation," Ambani said in the statement.
