Reliance Capital Blog

Reliance Capital, India's Berkshire Hathaway

Tuesday, May 08, 2007

Big names eye RCL MF stake

Four global giants, including Schroders, Blackstone and US-based Capital, have offered to buy a small stake in Reliance Capital’s mutual fund business as rapid growth in the domestic market continues to lure foreign firms. The Reliance Capital board is believed to have met last week to discuss the offers.

A person familiar with the situation told ET that Schroders, the British fund with nearly $260 billion of assets, Blackstone, the big US private equity fund, and one of the units of US-based Capital have submitted firm offers to Reliance Capital, the parent of Reliance Capital Asset Management.

One more financial investor has also put in a bid, but the entity’s name could not be ascertained. Reliance Capital is expecting a valuation of $1.2 billion, or about 10% of assets under management of Rs 48,830 crore. A Reliance Capital spokesperson declined comment.

A successful transaction would help cement a partnership between Reliance Capital, a fast-growing financial services firm, and one of the world’s biggest money managers. It would intensify competition in the ultra-competitive market with 36 players.

Assets under management in India have more than doubled in the past two years due to a rising market, strong investor appetite and savvy marketing. At the end of April 2005, assets under management (AUM) stood at Rs 1,58,147 crore. By April 2007, the figure had risen to Rs 3,50,441 crore. Sensex rose 125% in this period.

But even this $80-billion industry is a dwarf compared with its peers in developed markets. India’s AUM amount to just 0.5% of the global AUM. Overseas firms, such as BNP Paribas, SocGen and Swiss giant UBS, which have bought large stakes in leading players in the past year, are hoping a continued rise in Indian investor appetite would sustain growth in the coming years.

Reliance is the only large mutual fund owned completely by Indians. Its AUM size three years ago was a mere Rs 9,000 crore. A determined drive to expand distribution and launch of several new schemes helped by a rising market has seen it become the country’s largest player.

A deal at the price Reliance Capital is expecting would make it the most expensive acquisition in the mutual fund industry. This is all the more so as Reliance Capital is only planning to offer a minority stake of 5-10%.

BNP bought 50% in Sundaram Finance’s mutual fund business at a multiple of 7% of its AUM, while SocGen paid a multiple of 8% for a 37% stake in a fund promoted by State Bank of India. UBS recently paid 4% for 100% of Standard Chartered’s business.

Thursday, May 03, 2007

Reliance Cap picks up 2.65 pc stake in Network 18

Close on the heels of its open offer for acquiring 20 per cent stake in television broadcaster TV Today, Reliance Capital has picked up 2.65 per cent stake in Network 18 Fincap for Rs 53.97 crore in open market transactions.
The Anil Dhirubhai Ambani Group firm has acquired 13.52 lakh equity shares of Network 18 Fincap at a price of Rs 399.22 in a bulk deal on the Bombay Stock Exchange.
Network 18 Fincap is the Group holding company of broadcaster TV18, GBN, Web18, HomeShop 18 and Studio 18.
In a separate deal, Sonata Investments sold off 12.48 lakh equity shares of Network 18 Fincap for Rs 395 per share.
TV Today Network Ltd runs Hindi news channel Aaj Tak and English news service Headlines Today.
Earlier the company had announced that the open offer would be made for acquisition of the mandatory 20 per cent share capital of TV Today from the existing shareholders, at a price of Rs 130.50 per share, amounting to approximately Rs 150 crore.

Now, buy gold coins from Reliance Money

Reliance Money, the investment product distribution arm of the Anil Dhirubhai Ambani Group, is now foraying into retailing of its own brand of gold coins, which would be made exclusively by Swiss precious metal refining major Valcambi.

The company today announced a partnership with Valcambi as well as the launch of gold coins, while becoming the first non-banking private sector company to retail gold coins in India.

"Gold has always been an important element of Indian tradition. Even today, it is an important financial investment. India is the largest consumer of gold in the world, and we feel that it is important to add this to our portfolio of existing products and services," Sudip Bandyopadhyay, CEO, Reliance Money said.

The 24 carat 999.9 pure gold coins, with a purity certification from the Swiss company, would be sold in denominations of 5gm and 8gm at Reliance Money as well as Reliance World outlets of Reliance Communications.