Reliance Capital Blog

Reliance Capital, India's Berkshire Hathaway

Friday, March 28, 2008

Reliance Money to open branch in Oman

Reliance Money, the financial distribution company of the Reliance Anil Dhirubhai Group plans to open a branch in the Sultanate of Oman.

The company has received approval for the same from the Capital Market Authority (CMA) Board, the regulator in Oman.

“The new branch will start operations in April and this is a part of our endeavour to reach out to the 20 million NRI and PIOs ( Persons of Indian Origin) residing in West Asia”, said Mr Sudip Bandhopadhyay, Director and CEO, Reliance Money.

The company will initially launch its broking and mutual fund distribution services and also offer portfolio management services (PMS). The portfolio management services will be offered at an entry level of a minimum of $50,000.

The company will also be offering a mobile portal that will allow users to get free real time access to market information on their phones, in addition to real-time chat facility with the company’s 35 member research team.

Reliance Money made its debut in the UAE in February.

Thursday, March 20, 2008

Sam Ghosh to be new CEO of Reliance Capital

Anil Ambani group's financial services arm Reliance Capital is set for a change of guard at the top with Sam Ghosh, who has led ramping up of German insurer Allianz's Indian insurance ventures, about to replace Amitabh Chaturvedi as the new CEO.

The appointment, to be effective from next month, would also see a significant focus of Reliance Capital on its insurance business as well as retail customers.

While a company spokesperson declined to comment on the development, industry sources said that Ghosh would assume the role from April 1. Ghosh would report to Reliance Capital Vice Chairman Amitabh Jhunjhunwala.

Sources said that Ghosh has already put in his papers at Allianz. Allianz has appointed Abdul Rahman Tolefat as the new CEO for Allianz Takaful Bahrain and Kamesh Goyal as the new regional CEO for the Middle East and North Africa, with effect on April 1, 2008.

Allianz said in a statement that Ghosh, the current regional CEO for Middle East and North Africa, will give up his position with effect from April 1 in order to assume an assignment outside of the Allianz Group.

At Allianz, Ghosh has been responsible for ramping up business of its joint venture in India -- Bajaj Allianz General Insurance and Bajaj Allianz Life Insurance. Both these insurance ventures are today amongst the top three businesses in the country in their respective sectors.

The Middle East regional unit of Allianz, with headquarters in Bahrain, also consists of Allianz entities in Egypt, India, Jordan, Lebanon, Pakistan, Saudi Arabia and Sri Lanka.

Monday, March 03, 2008

Reliance Capital enters microfinance market new

Reliance Capital, the financial services arm of Anil Dhirubhai Ambani Group, today announced the launch of its joint venture microfinance initiative in two states. The company plans to follow this up with a national rollout.

Reliance Capital has teamed up with MAS Financial Services Ltd and Vardan Trust, two Gujarat-based microfinance institutions, to offer microfinance services.

Reliance Capital plans to fund microfinance institutions initially in Gujarat and Maharashtra, before spreading out on a national scale.

"Our vision is to provide access to finance at the grassroots level by partnering with MFIs serving the rural and semi-urban areas. This initiative is in line with the group's commitment to play a serious role in bringing value to the lives of the underprivileged and the aged in India," Tina Ambani, wife of group chairman Anil Ambani, said while handing over the first lot of cheques.

"The initiative envisages lending to MFIs, which would then be on-lending finances to self-help groups, Individuals and joint liability groups as per their norms," Reliance Consumer Finance' deputy CEO K V Srinivasan said.

"This unique partnership will help us in optimally utilising our expertise in distribution of credit to small enterprises for income generation activities, consumption and emergency needs," said Mukesh Gandhi, director of MAS Financial Services.

''This tie-up would help us in spreading our network and meeting the growing need for finance by micro-entrepreneurs,'' added Mahesh Vara, CEO of Vardan Trust.

MAS Financial Services, with 61 branches across Gujarat, caters to over 2,50,000 customers in the urban, semi-urban and rural markets.

Vardan Trust offers microfinance to farmers, small shopkeepers, artisans, small enterprise workers and individuals engaged in animal husbandry.

Reliance Cap's consumer fin div disburses loans of Rs 5,000-cr

Reliance Capital's Consumer Finance Division's disbursements have crossed the Rs 5,000-crore mark, a top company official said.

"We have already disbursed Rs 5,000 crore. Market share is not our major consideration. We are emphasising on quality portfolio," Reliance Consumer Finance Deputy Chief Executive Officer K V Srinivasan said on the sidelines of a press conference here today.

Reliance Consumer, which commenced commercial operations in May 2007, had disbursed loans of over Rs 3,000 crore within the six months of operations.

"Our personal loan portfolio is limited to one-fifth of total portfolio," Srinivasan said.

Asked on market share following its late entry in home loan segment, Srinivasan said, "We are in the home loan business for 8-9 months only and market share is not our major consideration."

Reliance Consumer ranks among the top 3 private sector financial services groups in terms of net worth.

Reliance Capital can trade in bad loans

Anil Ambani’s Reliance Capital, one of the country’s biggest finance companies, has been allowed to trade in bad loans. On Tuesday, the company received the RBI approval that will enable its asset reconstruction firm to buy stressed assets from the Indian financial system. The system is estimated to have Rs 1,65,000 crore worth of stressed assets with an annual accumulation of nearly Rs 20,000 crore.

Reliance Capital-promoted Reliance Asset Reconstruction Company (RARC) will put in Rs 100 crore as initial investment. A Reliance Capital spokesperson confirmed the development. Reliance Capital holds 49% stake while two international investors, George Soros and Blue Ridge, hold 9.5% stake each in RARC. Also, GIC holds 9% equity in the venture while Indian Bank and Corporation Bank have 11.5% stake each.

Rajendra Kakkar, former MD and CEO of Arcil, is heading RARC which had applied for an ARC licence from RBI nearly one-and-a-half years ago. Reliance Capital, which is the first non-banking finance company to get the ARC licence, may intensify the competition in the ARC space as it did in sectors like mutual fund and stock broking.

However, after a smart pick-up in initial years, the numbers of stress assets deals have fallen due to new rules. For instance, the regulator has now set a floor price for any such deal. This price is the net present value of the cash flow from the asset. As this can be significantly higher than the heavy discounts offered in earlier deals, ARCs find it less lucrative.

Moreover, the government’s decision to treat optionally convertible debentures (OCDs) and preference shares as external commercial borrowings (ECBs) has put off many vulture funds, which were using these instruments to buy bad loans from banks. “But buoyant property prices have helped the market and pushed up the recovery of bad assets. In some of the recent cases, the recovery is more than 50% of the price at which the firms bought the stressed assets,” said a banker. Nearly Rs 10,000 crore worth of assets are likely to be available for grabs this year.

Out of the huge NPAs, roughly Rs 80,000 crore was refereed for resolution through the Corporate Debt Restructuring (CDR) scheme. The banks have restructured Rs 27,000 crore standard assets (that do not figure as NPAs) and Rs 65,000 crore debt through the CDR route. The assets that have been restructured continue to require significant amount of lender supervision. There is always a likelihood that some of these assets may turn into NPAs again.

The market leader in the asset reconstruction space is Arcil, which was floated by the State Bank of India, IDBI, ICICI Bank and the Punjab National Bank. It is the oldest one, set up in 2003. It has bought more than Rs 32,000 worth of assets for nearly Rs 8,000 crore.

The other licence holders are ASREC (the specified undertaking of UTI), International Asset Reconstruction Company (Citi, Union Bank and Centurion Bank), Pegasus (a group of private investors including big bull Rakesh Jhunjhunwalla), Asset Care Enterprise (IFCI, Punjab National Bank, Life Insurance Corporation of India) and Dhir & Dhir Asset Reconstruction and Securities. Another half a dozen applications have been lying with the central bank seeking licences to float ARCs.