Anil Ambani enters private equity space with his REAL company

04 August 2008

The private equity space has a big new player – Anil Ambani. His financial services arm, Reliance Capital, has launched a wholly owned subsidiary, Reliance Equity Advisors Ltd (REAL), to offer the entire bouquet of private equity services. Ramesh Venkat, group CFO of the Anil Dhirubhai Ambani Group (ADAG), has been given the additional responsibility of spearheading REAL.

REAL's board will include Venkat, who heads the new firm, as well as Amitabh Jhunjhunwala, vice chairman of Reliance Capital, and chartered accountant Rajendra Chitale. The company has hired 15 people from private equity firms including Actis LLP, ICICI Ventures and Sequioa Capital.

REAL plans to raise $1 billion overseas for a private equity fund, $200 million of which has already been provided by Anil Ambani. Two linked funds, one based in Mauritius and the other in India will mobilize the balance.

This initiative is separate from the $500 million that Reliance Capital invests in a proprietary manner, but has the company acting as an advisory player. Like any other private equity advisor, REAL will earn fees against its advisory services.

REAL chief Venkat said that the fund would focus on sunrise sectors such as services, logistics, realty and pharmaceuticals. The ticket size of investment will be in range of $15 to100 million. In addition to providing growth capital and means for financial restructuring, REAL will lend money and expertise to help Indian companies in acquiring foreign assets.

Ambani joins Citigroup Inc., Warburg Pincus LLC and 3i Group Plc in seeking investment opportunities in India. The country's stock market's benchmark indices have recorded their worst yearly halves ever, forcing companies desirous of capital to desist from public offerings and instead go the private equity route.