Reliance Capital Blog

Reliance Capital, India's Berkshire Hathaway

Sunday, July 13, 2008

REL Money picks up 26% in NMCE

Reliance Money, the broking and financial services arm of Reliance Capital, is picking up 26% in Ahmedabad-based National Multi Commodity Exchange (NMCE) subject to regulatory approval. NMCE may issue fresh shares to enable Reliance Money take stake in the commodity bourse.

Reliance Money CEO Sudip Bandyopadhyay declined to reveal the deal value, other than saying that his firm had bought the stake for ”an attractive valuation”. Reliance Money will get two seats on NMCE board, Mr Bandyopadhyay added.
In February 2008, the Bombay Stock Exchange had bought a 26% in NMCE.

According to sources involved in the transaction, the value of that deal was around Rs 40 crore. Market watchers say Reliance Money would have paid roughly the same amount. Mr Bandyopadhyay said his company will use its existing chain of 12,000 outlets to expand its commodity operations. Agri commodities will be the priority, and the company will later look at non-agri commodities like bullion and metals.

According to Mr Bandyopadhyay, post the deal, Central Warehousing (CWC) will hold 26% in NMCE, Gujarat Agro Industries 7%, Nafed 5% and Punjab National Bank 10%. However, NMCE managing director Kailash Gupta said the shareholding pattern is still being discussed with the shareholders.

Mr Gupta said that its a strategic alliance with Reliance Money to increase the reach of NMCE through the Reliance Group’s network, which also includes the ADAG group’s telecom customer base. Actively traded commodities on NMCE include pepper, rubber, raw jute. In rubber, the government has suspended futures trading in May for four months.

Tuesday, July 08, 2008

ADAG enters Saudi financial services sector

Overseas financial services business is the new target of Indian firms. Reliance-ADAG is picking up 26% stake with management control in a full-fledged financial services company in Saudi Arabia. The group is in the process of raising around 200 million Saudi riyals (Rs 230 crore) from Middle East sovereign wealth funds and other institutional investors who will together hold 74% stake in the venture.

R-ADAG will be the single-largest shareholder in the firm, which has been christened Riyada Reliance Money. There will be a small group of around seven to eight investors. However, none of them will have more than 26% stake in the company.

Riyada Reliance Money will be engaged in various activities, including brokerage, depository services, investment advisory, asset management and investment banking. Incidentally, this would also mark the group’s entry into investment banking, an area where R-ADAG’s financial arm Reliance Capital is not present in India. The venture will be an extension of R-ADAG’s existing retail brokerage and financial products distribution business which is under Reliance Money, which is a subsidiary of publicly-listed Reliance Capital.

Reliance Money’s director & CEO Sudip Bandyopadhyay said: “We are in negotiations with various firms to raise funds and have received positive response from some sovereign wealth funds.”

There are a number of sovereign wealth funds in the Middle East, including UAE’s Abu Dhabi Investment Authority which is believed to be the world’s biggest sovereign fund.

Some of the other sovereign wealth funds in the region include Dubai-based Istithmar and Dubai International Capital besides Kuwait Investment Authority and Qatar Investment Authority. Incidentally, Saudi Arabia itself is reportedly in the process of launching a similar investment fund.

Some of these sovereign wealth funds’ investments have come under heavy scrutiny as they have picked up equity stakes in large global firms including some blue-chip financial majors such as Citigroup, Standard Chartered, HSBC and Merrill Lynch.

Mr Bandyopadhyay explained R-ADAG’s decision to start a financial services venture in Saudi Arabia, “The entire Middle East, Saudi Arabia in particular, is flush with funds in the wake of oil prices shooting to new historical highs. Besides, Saudi Arabia has a large base of non-resident Indians estimated to be 2 million strong.”

In addition, there is a policy aspect. The equity brokerage market in Saudi Arabia has opened up due to a policy change a year ago which bars banks from providing brokerage services in Saudi Arabia. This has left just about 20 odd brokerages in business which are largely domestic Saudi Arabian firms. R-ADAG had also looked at the option of acquiring one of the existing firms but decided to set-up the business on its own.

R-ADAG also has a small presence in few other markets in the region including UAE and Oman and had recently struck a partnership in Hong Kong which marked its entry into the Chinese market. The basic objective to expand in these markets is to target a growing number of NRI population globally. Reliance Money, one of the largest broking houses in India has over 2 million customers and 8,500 outlets across 4,250 locations.

Reliance MF scouts for global acquisition

Reliance Capital Asset Management, which manages Reliance Mutual Fund was scouting for global asset management companies for acquisition to make the company a global player in the next five to seven years.

"We want to be global player in the next five to seven years and toward that we are open for acquisitions in the overseas markets," Reliance Capital Asset Management Ltd (RCAML) CEO Vikrant Gugnani said here today.

He was in city to announce the company's new product SIP+insure scheme which offers systematic investment plan along with free insurance.

He, however, did not elaborated on the details of acquisition plan and neither shared about markets he was looking at.

Reliance has already began the journey toward the aim of being a global asset management company. It has established a company in UK, Reliance Capital AMC UK Plc.

"The UK company has already got the license as a investment management company and expected to be operational," Gugnani said.

The company has assets of Rs 98,430 crore as of May with presence in 300 cities across the country.

He pointed that there had been shift of investment to SIP products and he expressed confidence on success of the SIP with insurance product.

SIP+Insure offers investor to investment a minimum of Rs 2,000 per month and minimum contribution has to be three years

Reliance Capital sets up arm for UK operations

Reliance Capital Asset Management Company has set up a wholly owned subsidiary for its UK operations.

The subsidiary would start operations after six months, Vikrant Gugani, CEO of Reliance Capital Asset Management Ltd, said here.

The subsidiary, to be named Reliance Capital asset Management (UK) Pvt Ltd, would sell its funds in UK and would also launch Europe-focused funds soonStressing that the company would focus on inorganic growth in offshore markets in the coming years, Gugani said, “We have a target to become the first Indian global asset management company within the next five-six years.” The company already has a subsidiary in Singapore and it also operates in Mauritius and West Asian countries.

Speaking at the launch of the SIP+Insure option here, Gugani said, “The equity market would remain volatile this year and it is safer to invest in equity funds only over a three-year horizon. The newly launched investment option comes with a free life insurance cover and is currently provided in 10 select equity schemes of Reliance Mutual Fund.

He also pointed out that even though the number of new investors is are now less compared with the March-April figures, the number of new sign-ups for the Systematic Investment Plans have been growing by almost 35-40 per cent over the last three months.

Reliance Capital enters Nigeria

Reliance Money, the broking and financial services arm of Reliance Capital (Q, N,C,F)* has entered into a distribution tie-up with the Nigeria-based Chellarams, reports Business Standard.

The tie-up is for catering the needs of Nigeria based non-resident Indians in Africa. Reliance Money would be launching its broking and portfolio management services (PMS), mutual fund and insurance distribution business.

The company`s portfolio management services in Nigeria would be offered at a threshold level of as low as USD 50,000. It is also panning to get a membership of the Lagos stock exchange.