Mumbai: Reliance Capital Ltd, the financial services arm of the Reliance-Anil Dhirubhai Ambani Group (R-Adag), is taking a leaf out of consumer goods companies that have successfully ventured outside India’s big urban centres.
India’s biggest private asset manager wants to reach out to a wider circle of people and sell its products to those who have traditionally preferred to park their money in the safe haven of bank deposits.
Higher goals: Madhu Kela of Reliance Mutual Fund. The firm plans to appoint a panel of 8-10 specialists to help expand scale and reach. Abhijit Bhatlekar / Mint
“The real focus is Bharat, where 90% of the people are yet to benefit from financial services,” said Madhu Kela, head of equities at Reliance Mutual Fund, and soon to be chief evangelist of this new marketing thrust. “For instance, we have a monthly investment plan with assets of Rs6,700 crore. This product has invariably fetched returns that are around 200 basis points higher than bank deposits. But many investors in small towns are not aware of this. Our goal is to reach them.”
The plan involves appointing 8-10 specialists from various industries to build a think tank as a part of the strategy to expand the company’s scale and reach in the financial services space. This team will be formed within the next year to devise programmes to enhance Reliance Capital’s penetration across the country.
“When you start managing a large sum of money, strategy is very important. By building a separate strategy team, I think we will be able to put all the resources in use,” said Kela, who’s set to become chief investment strategist at Reliance Capital starting 21 September. The new team may include former chairmen of banks and chief executive officers, he added.
“We will build a team of very senior professionals from various industries who would be able to help us in our strategic decisions to reach out to the huge untapped population of our country,” Kela said.
The approach will give the firm an opportunity to access customers across the spectrum and boost business, he added.
“Such a team is required. For instance, we do not track government policy decisions that closely. If we are targeting the common mass of India, we would require people who have expertise in such areas,” Kela said.
Abizer Diwanji, head of financial services at audit and consulting firm KPMG, said such a move would help in reaching out to new markets.
“Having a panel of advisers drawing from senior-level talent in the specific sectors is unique and I don’t think this has been replicated elsewhere,” he said. “Usually, companies tend to recruit such experts as members on the board, but keeping them on a separate panel ensures that while they are not burdened with any executive role, their technical expertise can be utilized.”
Diwanji said that to grow the company in semi-urban and rural centres, Reliance Capital might want to look at building an operational team with talent from the financial services sector who have experience working in such areas. “The dynamics of such markets is entirely different from the metros,” he said.
Reliance Capital manages assets worth Rs1.5 trillion, with at least Rs1.02 trillion under the company’s mutual fund (MF) arm and the rest with its pension funds, managed accounts and hedge funds.
It has equity assets of at least Rs50,000 crore across its life insurance, MF, private equity, venture capital, offshore funds, portfolio management services and wealth management businesses.
In his new role, Kela will mentor portfolio managers and provide strategic inputs and guidance on investments across the Reliance Capital group of companies.
Kela joined the firm in 2001 as an analyst and started managing MFs in 2003. He rapidly became one of India’s top money managers as the equity assets of the MF business grew from Rs25 crore in 2001 to nearly Rs40,000 crore now. Reliance Mutual is the largest fund house in India in terms of assets under management.
Discussions about creating a strategy team for financial services business have been under way for at least two months. “My understanding about the financial services business has been recognized by the company,” Kela said.
Dhirendra Kumar, CEO at Delhi-based MF tracker Value Research India Pvt. Ltd, said market perceptions about Reliance Capital’s MF business aren’t borne out.
“I do agree that he managed to attract a lot of money for the company during the bull run, but the market is ever-changing,” Kumar said. “Reliance is trying hard to revive its team and way of operation to adjust to the changes.”
Sunil Singhania, currently one of the equity fund managers at Reliance Mutual, will succeed Kela as head of equities.
The company also plans to tie up with public sector banks and make acquisitions, if required, so as to expand its reach, he said.
As of 31 March, R-Adag had a market capitalization of over Rs1.25 trillion, with total assets of at least Rs1.74 trillion and net worth of Rs83,000 crore.