Rel Cap, Daiwa to set up i-banking in India

Chaitali Chakravarty & Arun Kumar NEW DELHI 

ANIL AMBANI-CONTROLLED Reliance Capital, through its subsidiary Reliance Securities, is entering into a strategic alliance with Japan's second-largest investment bank Daiwa Securities to set up investment banking business in India. 
    The deal will enable the two firms to share clients in their domestic markets. With Daiwa, Reliance Capital will be able to tap Japan's pool of high net worth individuals who want a slice of the India story, said an official involved in the deal requesting anonymity as he is not authorised to speak to the media. A Reliance Capital spokesman declined to comment for this story. 
    "Indian companies that are in the midst of expansion are looking at global capital. Japan, probably, has the largest pool of high net worth individuals looking to invest outside their country. This alliance will marry these two requirements," he said. 
    The two companies are in advanced stages of negotiations to finalise the contours of the deal, two other officials involved in the negotiations said. 
    Indian companies are on a fund-raising spree, tapping QIPs, initial public offers, overseas issues of convertible instruments and equity issues. In the first six months of the current fiscal, Indian companies have raised $9 billion and plan to raise another $15 billion in the next six months. 
    Potential IPOs would help provide investment avenues to Japanese investors, said a leading foreign banker. Daiwa has helped Indian cos raise funds 
RELIANCEMoney, a wholly-owned subsidiary of Reliance Capital, received a merchant banking licence from Sebi last September. Reliance Capital has interests in asset management, life and general insurance, private equity and proprietary investments, stock broking, depository services, distribution of financial products and consumer finance. 
    Daiwa Securities, a joint venture in which 40% stake is owned by Sumitomo Mitsui Financial Group, offers investment banking services, mostly to domestic companies and Japan-based multinationals. 
    Daiwa has advised some Indian institutions such as the Indian Railways Finance Corporation (IRFC) and EXIM Bank to raise debt of around 50 billion yen since March 2005 from the Japanese market. 
    Anil Ambani, promoter and chairman of Reliance-ADAG, had said at the last AGM of Reliance Capital: "Given the scale and magnitude of our relationships across corporate India and the sheer size and reach of our distribution network, we're ideally positioned to create a significant presence in this (investment banking) business."