BK Modi’s Spice looks at financial services

BK Modi’s Spice looks at financial services

Mumbai: Spice Investment and Finance Advisors Pvt. Ltd, promoted by B.K. Modi, is marking an ambitious entry into financial services that includes insurance, mutual funds, microfinance, broking and distribution.

“We are looking at a whole range of new businesses to be set up under Spice Finance, which will act as the holding company," Sudip Bandyopadhyay said in his first media interview just days after joining as group president (financial services) at the Spice group.

“After the recent acquisition of stake in Wall Street Finance, the group is looking to enter asset management, insurance businesses along with a broking and distribution arm," said Bandyopadhyay, who until earlier this week was with billionaire Anil Ambani’s brokerage firm Reliance Money.

In September, Spice Investment and Finance acquired 51% in Wall Street Finance Ltd after the Reliance-Anil Dhirubhai Ambani Group (R-Adag) sold its nearly 37% stake in the money changing and transfer firm, and followed it up with an open offer.

The firm will now be renamed Spice Money.

Bandyopadhyay said that although the Spice group was looking at both greenfield and acquisition routes to entering these segments, acquisitions would expedite its entry.

Two investment bankers have already been engaged to identify potential targets, he said, but declined to identify them since “there are companies (on the block) with (insurance) licences and there are shareholders looking for an exit".

“There is a lot of competition in every segment of the financial services sector. It is very cluttered too and a new player may take three to five years creating a space for itself," said a Mumbai-based sector analyst with a local brokerage, who added that he will be “very watchful" as the Spice group has little experience in this segment.

“The profitability is already squeezed in the asset management and institutional broking businesses," he said, declining to be named.

Bandyopadhyay, who was with R-Adag for about four-and-a-half years, most of it heading Reliance Money, says the eventual structure will comprise a holding company and subsidiaries in specialized business segments, similar to the structure at Reliance Capital Ltd that own the Reliance Money brand.

Singapore-based Spice group has interests in telecommunications, retail, real estate and entertainment.

Bandyopadhyay also said that microfinance, with a major focus on smaller cities and towns, was firmly on the group’s radar. “We will go greenfield in microfinance and plan to deploy Rs2,000 crore in 18 months starting January next year," he said.

Three subsidiaries have already been incorporated under its broking and distribution business—to be branded Spice Bulls—one each for equity, insurance and commodity broking.

He declined to quantify the investment in the division.