Mukesh Ambani enters financial services sector
Ten months after the Ambani siblings ended a non-compete agreement that barred the elder brother from getting into the financial services space, Mukesh Ambani’s Reliance Industries has signed an agreement with DE Shaw, a New Yorkbased hedge fund, to float a joint venture in India. Since the time the two brothers agreed to drop the non-compete clause, a legacy of the agreement that split the undivided Reliance Group in 2006, there was speculation in the market that RIL would enter the lucrative financial services space in India. Sunday’s announcement is seen as an official confirmation. Mukesh Ambani is entering a space where younger brother Anil has a presence through ADA Group company Reliance Capital. ADAG’s financial services firm has a strong presence in stockbroking, mutual fund, and life and general insurance. “This joint venture will incorporate the DE Shaw Group’s investment and technology expertise with Reliance’s operational knowledge and extensive presence across India to offer a comprehensive array of financial services to the Indian marketplace,” an RIL release said. With assets worth about $20 billion globally, DE Shaw established its presence in India about 15 years ago, which is one of its main focus areas in Asia. “This joint venture will draw upon the core competencies of both firms to develop a platform that can serve the growing needs of Indian companies and individuals,” said Anil Chawla, MD and head of PE activities in India, DE Shaw Group. No other details of the deal were disclosed. Sources in the company said that the JV agreement set just the broad contours of RIL’s plans to enter the financial services space and going forward, the finer details will be thrashed out. Earlier, in mid-2010, it was reported that RIL and DE Shaw were floating an $800 million fund that would invest in the infrastructure sector in India. In June last year, Mukesh bought Infotel Broadband for Rs 4,800 crore, marking is entry into the telecom sector. Just before the acquisition, Infotel had won pan-India BWA spectrum licence for around Rs 12,848 crore. Besides, RIL also acquired 14.80% stake in EIH, operator of the luxury Oberoi hotel chain, in August last year in two tranches at over Rs 1,000 crore.