Even as global asset managers face a backlash in the wake of the credit crisis,this has not forced a few to retreat from their plans to foray into investment banking.
Reliance Money, the retail brokerage and distribution arm of Anil Ambani's financial services firm Reliance Capital, is now expanding into merchant banking. The firm today announced that it has received Category I merchant banking license from the market regulator SEBI.
The license allows Reliance Money to offer a range of investment banking services such as issue management, underwriting, private equity advisory & syndication besides corporate finance services in India. The company is infact eyeing atleast 50 fund-raising deals by the end of the current fiscal.
Reliance Money director and CEO, Sudip Bandyopadhyay has indicated that one of the key target areas will be small and mid sized firms: "While the main focus of the industry has been on large caps, we see a huge opportunity in serving the small and mid-sized segment, currently being under-serviced."
The firm will initially concentrate on issue management activities such as IPOs, FPOs, rights Issue, QIPs,open offers, buyback offers, delisting offers, ADR/GDR/FCCB advisory besides preferential issue of listed equity. It plans to leverage its existing customer base of more than 2.5 million clients across 5,165 cities and towns to effectively distribute the IPOs it handles.
Interestingly, Reliance Capital has also recently launched a global investment banking outfit out of India called Reliance Equity International for which it has hired Keshav Sanghi from Deutsche Bank.
Reliance Money enters at a time when the asset prices are falling globally, and the domestic capital market is going through tough times. The global financial crises has triggered huge selloff in Asia including India as large global investors tighten their purse-strings, which has affected new fund raising plans. The primary market is going through a major slowdown with some large issues being postponed indefinitely in the wake of the stock market turmoil.