Courage doesn’t always roar. It’s a quiet voice in some of
us that leads us on telling us to silently keep on going till the hardwork
doesn’t pay off and the miracles that we have long believed in do not present
themselves to us. For Anil Ambani, this rung true every time his some business
developed a chronic fault line. While his other businesses may have suffered wreckage
due to colossal debts, owing to his wizardry in the sphere of finance has
helped him to make it successful in finance business, if not anything else.
Anil ventured into Reliance Capital the finance business
with Reliance Capital which he got after the 2002 demerger post his father’s
demise. In 2006, Reliance Capital
Ventures Limited merged with Reliance Capital. With this merger the shareholder
base of Reliance Capital rose from 0.15 million shareholders to 1.3 million. At the onset during the years of 2006-2007, Reliance
Capital started off as an asset management. During those years, Anil was known
for being a financial wizard; he had been credited for pioneering many
financial innovations in the Indian capital market. As a matter of fact, he had
earlier led India’s first foray into the overseas capital markets with
international public offerings of global depository receipts. Later on it,
given his financial wizardry, he redefined the breadth of its businesses in
general insurance, asset reconstruction, securities and wealth management. Scaling
the businesses to larger level the businesses of Reliance Capital branched out
to commercial finance, home finance, stockbroking, wealth management services,
distribution of financial products, private equity, asset reconstruction,
proprietary investments and other activities in financial services. And this, Anil
managed to pull off purely through organic growth.
In 2010 Anil entered new areas such as insurance and
consumer finance, and consolidated Reliance Capital’s numero uno position in
the mutual funds industry. It started not only catching on, but started to
steer profits as well. In 2011, Reliance Capital sold 26% stake in its life
insurance business, Reliance Life Insurance, to Nippon Life Insurance (Nissay),
amongst the world's largest life insurers, with an AUM of over 600 billion.The
transaction was completed at Rs. 3,082 crore for a 26 per cent stake, valuing
Reliance Life Insurance at $2.6 billion.
Later Anil diversified the company and it had over 20
million customers and a workforce of approximately 16,000 people at the end of
FY 2017. It reported a net profit after tax of over 1,000 crores for Financial
Year-end 2017. And in July that year, the company sold its 1% share in Paytm to
China's Alibaba Group for Rs 275 crore, making a profit of 2,600%. Later in
December, it had Rs 4.8 lakh crore of asset under management (AUM). At that
time, Anil had plans to build a bank under RCap and wanted to list it by 2017.
While addressing a shareholders' meet of RCap in 2013, he had said the bank
would help lower RCap's debt to one-fourth and would be listed as a separate
entity in three years. But later on, somehow due to reasons unknown, the plan
never got executed.
It was in March 2019, that the company started seeing a
downward trend in the market, where it was valued at Rs 4,138 crore on the BSE,
lower than the peak of Rs 70,240 crore in January 2008. A lot of this crisis
that his finance business is looking at is owed to the crisis that transpired
in the NBFC sector, which has been facing a long-drawn-out liquidity
catastrophe over a year after IL&FS starting defaulting on repayments.
According to Anil the only option left for the NBFCs and HFCs is to raise funds
through securitisation. He opined that that these companies have invested years
in reaching out to villages and the smallest of the towns in order to build
their retail franchise.
In May 2019, Reliance Capital signed a definitive agreement
with Nippon Life to sell its stake in Reliance Nippon Life Asset Management (RNAM).
Under the agreement, the Japanese firm spiked its shareholding in RNAM from
42.88 per cent to 75 per cent by buying shares from public shareholders and
RCap. Later, Reliance Capital sold its stake in the AMC business to its
partner, Nippon Life of Japan and realized approximately Rs. 6000 crore.
It stands imperative to note that all the businesses of
Reliance Capital are fully capitalised even in conventional capital absorbent
businesses like general and life insurance, while other businesses are capital
light. While his other businesses may be seeing trying times, it is due to his
intuitiveness in finance that seems to be working for this company.
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