RIL now India’s top PE investor, invests Rs 967 crore in alternative investment funds in FY15

MUMBAI: Reliance Industries, India’s largest private sector company in terms of revenue, has emerged as the largest investor in private equity funds in the country. The company invested about Rs 967 crore across various alternative investment funds in the financial year ended March 31, 2015. In 2013-14, the investments were Rs 683 crore.

Typically, limited partners —investors that commit capital to private equity firms — are institutional investors, pension funds, endowment funds, university funds and family offices.

Private equity officials said corporates rarely invest in long-term private equity funds as they prefer to invest in the growth of their own company. Companies usually park their excess cash in liquid schemes of mutual funds. Also, promoters typically invest out of their family offices across various asset classes.

“Almost invariably and commonly, the founders invest in alternate assets out of their family offices across the globe but balance sheet investments by a listed corporate is uncommon and if numbers are correct, it could be the largest in India,” said Bharat Banka, the former chief executive of Aditya Birla Private Equity.



Some of Reliance Industries’ private equity investments include KKR India Debt Fund I, where it has invested Rs 274 crore. Aditya Parekh’s Faering Capital India Evolving Fund has received Rs 271 crore, Renuka Ramnath’s Multiples Private Equity Fund-Scheme 1 got Rs 33 crore. RIL has also invested Rs 188 crore in Jai Corp’s realty fund Urban Infrastructure Opportunities Fund (UIOF). An email sent to RIL seeking comments didn’t elicit any response.

Globally, technology companies like Cisco, Microsoft, IBM and Intel invest in their own corporate venture capital arm which in turn invest in portfolio companies with some kind of synergies.

While large corporate houses such as the Tatas and the Aditya Birla Group have floated their own private equity funds but have made just anchor investments (10-15%), with a large portion of the money being raised from third party investors.

“Typically, balance sheets only indicate actual amount disbursed to a fund. However, the commitment to the fund would be much higher as committed amount is drawn over 4 to 5 years time period,” said the chief executive officer of a large PE fund.

To manage their treasury operations, corporates invest in money market mutual funds, debentures and equities. As on March 31, 2015, RIL has invested Rs 25,437 crore in different asset classes such as equities, debentures, mutual funds and private equity.

“To improve the overall yield on the treasury portfolio, the capital needs to be employed across various asset classes with different risk-return profiles. Investments in money market mutual funds currently yield only about 7-8%.

While alternate assets, like private equity, are illiquid and carry higher risk, these assets have potential for yield or IRR (internal rate of return) upwards of 18-20% and their inclusion in treasury can potentially improve the overall portfolio yield,” Banka said.

Investments of RIL have risen to Rs 76,451 crore in FY15 from Rs 60,602 crore in FY14. Its cash and bank balance has declined from Rs 37,984 crore to Rs 12,545 crore in FY15.