Mumbai, Mar 28: Reliance Industries, the largest company by market capitalisation listed on the Bombay Stock Exchange has now announced of getting into financial services. RIL will enter this space through a joint venture (JV) with the New York based DE Shaw, a global investment and technology company. The JV did not clarify what will be the different kind of financial products that it will offer.
Mukesh Ambani led RIL, had a non-competitive agreement with Anil Ambani's Reliance ADAG at the time of split of the Reliance Group. And the sphere of influence was carved on clear lines, RIL was limited to businesses of the old economy such as exploration and production, refining, gas and chemicals. Meanwhile Anil Ambani group of companies were focused on businesses related to new economy like financial services under Reliance Capital, entertainment through Reliance Broadcast and telecommunication via the company Reliance Communications.
This agreement was scrapped last year, and with this Mukesh Ambani ventured in telecommunication with the acquisition of Infotel Broadband for Rs 4,800 crore in 2010.
Now the move in financial services is significant by RIL as government has asked the Reserve Bank of India (RBI) to revamp the banking license. The regulator"s draft on the guidelines regarding bank licensing are awaiting clearances from the finance ministry.
On this occasion Mukesh Ambani said “The D.E. Shaw Group is a natural partner for Reliance. Together we look forward to participate in the growing Indian financial services sector."
DE Shaw & Co has was founded by David Shaw, then a computer science professor at Columbia University. The company was one of the early pioneer of quantitative investing. According to Institutional Investor's Alpha a magazine, March 2009 issue, "So secretive was the firm during its first few years that some employees wouldn't even tell their families where they worked, let alone what they were doing there."
"The 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, a Managing Director and head of D.E. Shaw"s group's private equity operations in India.