Mukesh Ambani plans big for financial biz, non-traditional way

RIL signed a joint venture with global private equity fund house DE Shaw late last month for its financial sector foray and is now considering businesses where it can utilise its expertise and presence in sectors like energy and retail, as also its proposed telecom and power ventures.

The businesses that RIL wishes to undertake with DE Shaw include energy trading, private equity, mutual fund, financial service distribution, infrastructure funding as also equity and debt funding for corporate sector, sources close to the development said.

Emailed queries sent to both DE Shaw and RIL in this regard remained unanswered. The final contours of its partnership with DE Shaw, such as the shareholding pattern and businesses to undertake, may be discussed at RIL's next board meeting on April 21.

Besides DE Shaw, RIL would also look at a number of other partners for various specific financial service businesses, as it has done in its retail business and to some extent in its energy operations, sources said.

The group would look at serving both corporate and individual customers with an equal focus through its various financial services offerings, they added. RIL has been working on its financial sector foray for about a year now and a final blueprint on this front may be finalised in next couple of months to enable Ambani to announce the details at the company's AGM later this year.

Between the two Ambani brothers, financial services hitherto have been the domain of younger sibling Anil Ambani, but abolition of their non-compete agreement last year paved the way for Mukesh to pursue this business.

However, the groups led by two brothers may still keep away from any direct competition in their various businesses in this space, at least for initial period, sources said.

RIL, and especially its chief, is known for expertise in in establishing ultra-high value projects in whatever businesses they intend to undertake and financial services would not be any different on that front, sources said.

A mega business plan is being worked out for the Reliance Industries group's entry into financial services sector, but it would be different from the traditional banking and financial businesses, at least in the beginning, they added.

Traditionally, large financial services companies are engaged in lending and deposit-taking businesses, as a bank or an NBFC (non-banking finance company), or investment and saving related activities like insurance, mutual fund etc.

Subsequently, the large traditional players indulge in corporate funding and other businesses. RIL is currently looking at those financial services that can be complemented with its other businesses in sectors like energy, retail, telecom and power, sources said.
Accordingly, the group is looking at energy trading, financial service distribution business as also infrastructure and corporate funding businesses, they added.

The group may use vast network of retail chain to sell products like insurance, mutual fund and forex of different players from India and abroad. RIL has already set up a few subsidiaries for financial services business, namely Reliance Retail Finance Ltd, Reliance Retail Insurance Broking Ltd, Reliance Financial Distribution and Advisory Services Ltd and Reliance Retail Travel and Forex Services Ltd.

Together, these entities had assets worth close to Rs 125 crore as on March 31, 2010. The plans to enter financial sector began taking shapes in June last year, almost a year after the two Ambani brothers decided to bury their hatchet to end years of acrimony.

Anil Ambani group is already present in a host of financial services businesses, including insurance, mutual funds, brokerage and non-banking financial services. While it is also present in distribution business through Reliance Money, this entity is in the process of shifting the focus more towards services like investment banking and brokerage.

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