Reliance Industries will form a joint venture with DE Shaw Group to build a financial services business in India.
The partnership brings together India’s largest private-sector company and a global investment firm with approximately $20 billion in capital as of earlier this month.
“The JV will incorporate the DE Shaw group’s investment and technology expertise with Reliance’s operational knowledge and extensive presence across India to offer a comprehensive array of financial services to the Indian marketplace,” said the two partners in a press release issued earlier this week.
DE Shaw has had operations in India for the past 15 years. It has more than 700 employees in the country engaged in investing and support activities from offices in Hyderabad, Gurgaon, and Mumbai.
The two partners are well known to each other. Mukesh Ambani, chairman and managing director of Reliance Industries, is highly respected both across corporate India and globally and, among his many board positions, he has been on DE Shaw’s India advisory board for a number of years. Ambani recently scored a coup when he became the first non-American on the Bank of America Merrill Lynch global board.
Media in India has been speculating about a tie up between the two firms since the middle of last year. The new company is expected to enable Ambani to offer services like trading of energy and carbon and related derivatives, and to build a presence across areas such as private equity and mutual funds.
Ambani’s entry into the financial services sector follows the unwinding of a non-compete agreement between Ambani and his younger brother, Anil. When the two brothers divided up the family businesses in 2005 after the death of their father and Reliance group founder Dhirubhai Ambani, Anil got control of the businesses in the telecommunications, financial services and power industries. The brothers agreed to dilute the non-compete last year as part of a resolve to reach an amicable settlement on issues related to gas supply.
Photo provided by AFP.