Mukesh Ambani led Reliance Industries Limited (RIL) has bought the entire stakes of Bharti group (74 per cent) in its financial services joint venture with French firm AXA, treading gradually towards establishing its footing in the Indian financial services sector.
Bharti Group, a well known telecom major, had chosen to opt out of financial services sector as it did not fit the company’s long-term growth plans. Moving out of its JV with AXA, Reliance Industries has readily stepped in to partner up with AXA in place of Bharti for two of the key services - Bharti AXA Life Insurance and Bharti AXA General Insurance.
Mukesh Ambani had been eyeing a foray into the Indian financial services sector for some time now and was looking to partner RIL with other major players from the financial services sector in an effort to thrust the venture further. RIL has slowly been making progress towards the same and has entered into significant joint ventures with international hedge fund leader D E Shaw and a likely tie-up with payment gateway leader AmEx to help push the vision to realization. It is now being speculated that this latest buyout is likely to fuel RIL’s plans sooner than anticipated. While the tie-up with D E Shaw will see Reliance venturing into institutional financial services business such as asset management, private equity, mutual funds and banking, the tie up with AXA will propel RIL’s entry into the insurance services sector. For now, Reliance Industries has also proposed an agreement whereby AXA would acquire from RIL and its subsidiary Reliance Industrial Infrastructure (RIIL) up to 24 per cent shareholding in both the insurance companies so that RIL will own 45 per cent and RIIL a 5 per cent holding respectively in the JV while AXA gets the balance 50 per cent in the same. With hopes of tapping into the financial advisory sector of India, RIL has acquired a great advantage following this buyout.