Reliance Capital is buying majority stake in UK-based exchange and money transfer firm No 1 Currency. Reliance Money Express, a subsidiary of Reliance Capital is picking 51% in Edinburgh-based No1 Currency for an estimated Rs 100 crore($20 million).
The deal will extend the scope of R-ADAG’s existing money transfer and currency exchange business. Reliance Capital, the group’s finance arm had in November 2006 acquired TravelMate from Swiss travel and tour firm Kuoni to enter the currency exchange business. This business was renamed as Reliance Money Express.
Last year Reliance Money Express had picked a strategic stake in public listed Wall Street Finance, which is engaged in money transfer business. Wall Street is also looking to get into domestic money transfer business which could peg it in competition with the likes of postal department’s money order business.
The UK deal will allow it to foray into the international forex business and to capitalise on the 1.6 million NRI population in the UK for money remittance business. This also mark the first overseas acquisition of a foreign exchange company by an Indian firm.
Edinburgh-based No 1 Currency operates close to 300 currency exchange outlets in the UK and is one of the fastest growing independent foreign currency specialists in the country. Formed in 1996, the privately-held firm is owned by its two founding partners David Hale and Mark McElney. The two partners will sell their shares partly to Reliance Money Express.
The current management of No1 Currency will continue to lead the firm and R-ADAG will get representation in the board of the firm.
What is interesting is that R-ADAG had been active in striking small and mid sized deals in the financial services sector even when the sector is hit the hardest due to global credit crisis. It had picked a stake in an upcoming commodity bourse in Hong Kong and is also looking to kick-start a commodity cum stock exchange in Nigeria. It already has a broking venture in Saudi Arabia.