Billionaire Ambani to Partner With D.E. Shaw for India Venture

Billionaire Mukesh Ambani’s Reliance Industries Ltd. (RIL) said it reached an agreement with D.E. Shaw Group, a closely held investment and technology development company, to offer financial services in India.

The joint venture will incorporate D.E. Shaw’s “investment and technology expertise with Reliance’s operational knowledge and extensive presence” in India, Reliance Industries, operator of the world’s biggest refinery complex, said in an e-mailed statement today.

Fast economic growth in the last three years is bolstering demand for services in India. U.S. investor Warren Buffett’s Berkshire Hathaway Inc. said March 2 it reached an agreement to sell insurance to Indian consumers via the Internet and by phone with Bajaj Allianz General Insurance.

Ambani, 53, last year acquired a stake in EIH Ltd. (EIH), operator of the luxury Oberoi hotel chain, as he diversifies away from the oil and gas industry that made him India’s richest man and the world’s ninth-richest person with a net worth estimated at $27 billion, according to Forbes magazine.

He also invested more than $1 billion in a broadband company and a cargo carrier and announced plans to build hospitals, universities and set up a sports-marketing company.

Business Split

The billionaire Ambani brothers split their family business after their father Dhirubhai Ambani died in 2002 without leaving a will. The brothers began negotiating a truce after a May 7 Supreme Court verdict asking Mukesh-controlled Reliance Industries and Reliance Natural Resources Ltd. (RNR), controlled by Anil Dhirubhai Ambani, to renegotiate a contract over natural gas supplies.

Mukesh and Anil agreed to end a 2006 non-compete agreement on May 23, allowing them to enter each other’s businesses.

“After the non-compete agreement being called off, this was waiting to happen,” said Jagannadham Thunuguntla, chief strategist at SMC Global Securities Ltd. in New Delhi, adding that Reliance Industries appeared to be gradually widening its range of services and products.

“Overall, it’s fascinating to see Reliance Industries increasing its diversification,” Thunuguntla said. “It may be critical for the company’s future in the sense that the group is diversifying from being a commodities player to more diversified services industry.”

Reliance Industries sold a 30 percent stake in 23 oil and gas blocks to BP Plc, Europe’s second-biggest oil company, on Feb. 21 for $7.2 billion. Bank of America Corp. (BAC) on March 16 picked Mukesh Ambani to join its board as the lender seeks to expand revenue from outside the U.S.

Manoj Warrier, a spokesman for Reliance, declined to comment on details of the venture.

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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