Reliance is planning for one more IPO. Does that scare you?


The Reliance business smorgasbord will have one more to the Reliance stock market kitty – Reliance Life. RELLIF just might be the next stock market ticker from the conglomerate. Reliance Life which is now part of Reliance Capital is all set for a spin-off and possibly an IPO. Reliance Life

Reliance Life is the life insurance arm of Reliance ADAG -  if it comes up with the IPO then it would be the first insurance company to be listed on the bourses in India. Reliance Capital is also planning to get into investment banking and will then be a complete non banking financial corporation. The only thing which Reliance doesn’t do is lend money to you and me.

The life insurance business closed the year ended 31 March with new-business premium worth Rs3,500 crore, an increase of 28% from the previous year.

Reliance Life’s valuation as per some estimates is between Rs 10,000- Rs12,000 crore. Size of the IPO is rumored to be 3000 crores.

Not so soon Mr. Ambani…

There is a reason why the life insurance companies are not yet listed. Not that they don’t need the money to run the business but IRDA has some restrictions. As per IRDA a company has to be in business for 10 years to go public. Reliance Life is only 6 years old.

Honestly that rule doesn’t make any sense. But a rule is a rule and all the companies are obeying it. Now there are already negotiations to reset the rule and come up with IPO framework.

When we sprinkle terms like policy, framework, negotiation and rule in any conversation, the bottom line is this – it will take time to have an outcome.

With the clout of Reliance it is very unlikely that it will wait for the policy makers. Instead it went to the finance minister to give them an exception. Knowing Reliance and the explosive growth they have seen will they get it or not is not the question we should ask. How soon will they get it is the question.

Why should any of this scare you?

Do you remember the Reliance Power IPO and what followed after that? I still have those nightmares. There is nothing which Reliance has done specifically for the things that followed. But tell that to Emmar MGF and this is what they would say- Reliance sucked all the money out of the market.

Though Reliance Power IPO is a mega IPO and Reliance Life doesn’t need as much money, there is a sentiment factor with IPO’s and the name Reliance itself. Sentiment works very well in India. Reliance Life needs some good IPO’s to preempt the IPO blues.

PS : Adani Group after a successful Mundra Port IPO are launching Adani Power IPO. This promises to be the blockbuster IPO of 2009.

  1. Sathish says

    Reliance infrastructure (previously Reliance energy ), reliance Power and now ADANI power.. Is his energy business that much complex? or they are making it complex ?

  2. Ankit says

    @Philip thats an interesting take here

    @sriram @arun I tend to disagree with u guys. The blood is same but then Anil has always been the high risk taker, and the PR guy. So, you never know how much of the stuff propogated is going to be exceuted.I however, dont doubt the execution capabilities of either brothers.But yes, atleast in the stock markets, IPO specially, past comes to haunt you like no other.
    Whatever happend to the Rpower IPO, i doubt if there will be too many takers this time

  3. Himanshu Sheth says

    Well, like you; I also remember Reliance Power nigtmare, I booked the shares at 11:00 PM on the last day of the IPO :)

    Well, not to forget Reliance Big Entertainment also planning for an IPO

    Though Reliance is always considered for a long term game plan, it is interesting what does Reliance comes up with :)

    -Himanshu Sheth

  4. Philip says

    If it’s Anil’s Reliance, yes it does scare me. If its Mukesh’s Reliance, am not so scared ;)

    1. Sriram Vadlamani says

      why is that? After all they come from the same family and should have the same instincts and philosophy?

    2. Arun Prabhudesai says

      I agree with Sriram, Its all in their blood..I dont think there is any difference… between both the brothers

      1. Philip says

        dunno why. i still have doubts about Anil’s execution and delivery abilities. Till he can prove it, maybe in the form of Rel communications and Reliance Energy, i might start to believe him.

        Whereas Mukesh does have a past history of having run Reliance industries as well as Reliance Petro well. Anyway, this is just a hunch. Maybe could be irrational too. He’s one of the principle players who setup the Jamnagar projects and the rollout of fiber optic across India when they launched reliance mobile services.

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