Ambani Detente – Reliance breaks the shackles,Plans to enter Indian Power,Telecom and Financial Services

The detente between the Ambani brothers which lead to the rescinding of the non-compete agreement has resulted in Reliance Industries  Ltd (RIL) being the biggest Winner in the win-win arrangement.While on one hand Anil Ambani’s Reliance Communication which was facing a liquidity problem has benefited by being free to sell a stake in the company,Mukesh Ambani’s RIL has gained even more. RIL has been a huge cash cow generating billions of dollars in free cash flow from its Energy businesses each year.However RIL was finding it itself hamstrung by the non-compete agreement which prevented the company from entering the areas in which ADAG ( Anil Dhirubhai Group ) operated in. RIL tried its hand at overseas acquisitions but was not finding much success.However with the Ambani Brothers burying the hatchet,Reliance find its hands free to enter the virgin territories of Telecom,Power and Financial Services which will be high growth areas in India’s booming economy

Reliance has firmed up its intentions in all Three Areas through acquisitions,JVs and greenfield expansion.

Financial Services

Reliance has made its move in this sector by signalling its intention through acquisition of a small private player JM Financial Services.With the private financial companies trading at decent valuations compared to the sky high valuations during the 2007-2008 this might be a great time to make acquistions.

Mukesh Ambani may buy MF firm – LiveMint

Mukesh Ambani, who controls India’s most valuable company Reliance Industries Ltd (RIL), is in talks to buy a majority stake in JM Financial Asset Management Pvt. Ltd, his first attempt to enter Anil Ambani’s territory since the estranged brothers scrapped a “non-compete” agreement between them a week ago.

Negotiations are under way for a deal that values JM Financial Asset Management, the money manager controlled by investment banker Nimesh Kampani, at around 8% of its assets under management, which equals Rs685 crore, said two officials close to the development who didn’t want to be named.

Power

Reliance is making forays into Power starved Indian Market by planning to set up Thermal ,Solar and Nuclear Energy Plants.With its superb project executions skills and rock solid Balance Sheet , Reliance is ideally situated to become a dominant player in this space

Reliance may foray into nuclear energy – report – Reuters

Petrochemicals-to-gas conglomerate Reliance Industries Ltd is looking to enter nuclear energy, the Economic Times reported on Monday, citing unnamed sources with knowledge of the matter.The energy major is believed to be in talks with Bechtel, the largest U.S. engineering firm, for a possible collaboration, the newspaper said.”RIL has indicated to the government that it is keen on generation and distribution of nuclear power,” it quoted an unnamed senior government official as saying, adding the plans are at a preliminary stage.

RIL may enter thermal power sector – Energy Business

For RIL power sector is not new as it is already supplying power to Jamngar refinery, Hazira petrochemical complex and Jamngar city through 800 Mw captive power plant, and said sources close to the family.
The company might enter in to the bidding process during next round of UMPPs are offered by the government. However it is unlikely that, RIL will enter in to telecom or financial service sector as RIL are a B2B company and not B2C company

Telecommunications

Reliance Industries had brought a revolution in the Indian Telecom space by introducing the “Monsoon Hungama” scheme which allowed poor Indians to go mobile at a  startlingly low cost of $11 ( Rs 500)  . This arm was hived off as Reliance Communications under the separation agreement between the two Ambani brothers.Now Reliance sees an opportunity to return to Telecom through the new wave of investments in 3G.

RIL to offer 3G, WiMAX devices – Financial Express

Five years after its exit from the country’s booming telecom sector, Mukesh Ambani’s Reliance Industries Ltd (RIL) is plotting the road map for a return trip. However, this time around, it won’t be plain vanilla telecom services that RIL will be interested in, but rather the emerging segments of 3G and WiMAX. According to executives familiar with the development, the initial strategy is not to enter as a telecom operator, though this cannot be ruled out in the long run.