RIL awaiting nod for financial biz; buys HDFC, SBI shares

New Delhi: Awaiting regulatory approvals for its foray into financial services sector, Mukesh Ambani-led Reliance Industries has acquired shares in giants like HDFC, ICICI Bank and Axis Bank as part of long-term ‘investments’.

These financial investments, estimated to be worth over Rs 1,200 crore, include purchase of shares of six banks -three each from the public and private sectors - and one housing finance major, HDFC Ltd.

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The banks whose shares Reliance Industries Ltd (RIL) has acquired also include HDFC Bank, SBI, Punjab National Bank and Canara Bank and these have been classified among ’long-term investments’ of the country’s biggest private sector company in its annual report for the year 2011-12.

All shares in these seven companies were acquired last fiscal and their total value stood at Rs 1,233 crore as on 31 March, 2012, and remains almost same at current prices.

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RIL did not own any shares in these seven companies at the end of the previous fiscal, 2010-11.

Interestingly, the disclosure about share purchase in these companies comes along with an update by RIL in the annual report that its joint venture with global giant DE Shaw Group for financial services business was awaiting regulatory clearance to start operations.

RIL had announced this JV in March 2011 “to build a leading financial services business in India”. No specific details have been disclosed so far about the business and products to be offered through this JV.

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The report being sent to RIL shareholders ahead of their Annual General Meeting next month said, “This JV is awaiting necessary regulatory approvals for the commencement of business activities.”

Meanwhile, RIL also said that it has submitted its reply to Sebi on show-cause notices issued in two cases by the capital market regulator, which oversees a large part of financial services sector in the country.

The notices were issued in connection with the “sale of shares of erstwhile Reliance Petroleum Ltd and the allotment of equity shares of the company (RIL) to certain companies against detachable warrants attached to privately placed debentures issued by the company (RIL),” it said.

With regard to the equity investment in seven financial sector giants, the acquired shares account for very small stakes - ranging from 0.004-0.01 per cent.

Among these, RIL’s holding of HDFC Ltd (1.44 crore shares accounting for about 0.01 per cent stake) were worth Rs 949 crore as on 31 March, 2012, followed by 5.4 lakh shares of SBI (0.001 per cent stake) worth Rs 112 crore. The value of shares held in each of the other banks were in double digits.

PTI