According to newspaper reports, Reliance Capital Limited has decided to convert itself into a special purpose vehicle cum venture capital outfit. The company plans to develop infrastructure projects and invest in infotech, internet, media and biotech startups. The company is also drawing up plans to enter the insurance sector and to expand its mutual fund business.
Reliance Capital Limited (RCL) is India's largest private sector financial services company. RCL has a net worth in excess of Rs 11 bn. The Reliance group owns a 53% stake in the company.
RCL is moving away from the traditional non-banking finance company mould by reducing business activities pertaining to inter corporate deposits and corporate loans. The company is setting aside Rs 10 bn to invest in its new business focus areas.
The company's decision to focus on new areas as well as concentrate on the mutual fund business will lead to a complete overhaul of its business portfolio. The new businesses involve high risk and large amount of capital but they also offer the best opportunities for future growth. As RCL has the funds to put up in these businesses the decision is likely to be beneficial to the company.
However, with the company deciding to focus on several new businesses at one time, there may be a thinning out of resources. Moreover, with competition in almost every field hotting up, the company needs to adopt a concentrated approach with a steady expansion in the portfolio of services. A rush into several new businesses may make it more vulnerable to competition.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407