Will also foray into investment banking, says anil ambani

“pathar ko mom kar de ye naam...”
— a shareholder at the reliance capital agm on tuesday

annual general meetings (agms) that figure the ambani name are often also a literary affair. shareholders went into poetic rapture at the reliance capital agm on tuesday — the one above a mere sample — as anil ambani, chairman, spoke of a possible ipo for the company's life insurance arm and announced plans for a foray into investment banking.

“we are considering various options to unlock this value — from a potential ipo (initial public offer) to strategic or financial stake sale, or even a combination of both - subject to necessary approvals,” ambani said at the meeting. a final decision will be taken shortly, he added.

ridham desai and sheela rathi of morgan stanley suggest that current estimates on earnings could be exceeded depending on government action.

“we are estimating earnings growth for the sensex at 5% and 17.5% in f2010 and f2011, respectively, in our base case. if the government executes on reforms, we believe there will be more upside to growth, especially in f2011,” desai and rathi said in a note.

institutional fund flows could also drive up markets, they said.

“fii ownership is coming off a 5-and-a-half-year low and is well off the peak. mutual (fund) cash balances have reduced over the past three months, but fiis still have substantial cash in their portfolios,” they said.

in july alone, foreign fund flows have been rs 6,374 crore, while domestic institutions bought equities worth rs 1,587.60 crore
market experts said liquidity is still flowing towards emerging markets and india, and risk appetite is adequate.

capital flows have been largely from the west through funds managed out of singapore and hong kong, said experts.

it has also come in from relatively new areas like japan and the middle east. as for the corrections, an ambit capital technical report said short-term corrections could take the markets down to 4350.

sharma, too, does not place the downside much lower — at 4150.

the life insurance arm has become one of the top four private insurance players in the country and the indian insurance market is expected to nearly double by 2012, said ambani.

reliance capital also announced plans to enter into the investment banking space in the next 12 months. “given the scale and magnitude of our relationships across corporate india and the sheer size and reach of our distribution network, we are ideally positioned to create a significant presence in this business,” said ambani. in the previous year, private equity and institutional broking had been outlined as new ventures for reliance capital.

fund raising for the private equity investment fund has begun, with a focus on high networth individuals (hnis) and financial institutions, ambani said. the focus of private equity investment will be on growth capital, buyouts, minority investment and acquisition financing. money will be put in sunrise and growth sectors.

meanwhile, the adag group's institutional broking arm, reliance equities international private ltd, which was set up in 2008, now has 50 fii parent accounts and over 500 sub-accounts.

Source : 22nd July 2009 / DNA