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Aditya Birla Group plans PE, real estate funds

The Aditya Birla Group is set to broaden the ambit of its financial services business by foraying into new segments that offer high growth, reports Sabarinath M.

business Updated: Sep 13, 2007 20:43 IST
Sabarinath M
Sabarinath M
Hindustan Times

The Aditya Birla Group is set to broaden the ambit of its financial services business by foraying into new segments that offer high growth.

The Birlas are looking at the option of entering into real-estate funds, private-equity fund, brokerages and non-life insurance businesses, according to a source familiar with the matter. An Aditya Birla Group spokesperson declined to comment.

The group is now present in life insurance, retail and corporate financing, asset management and distribution businesses.

It has partnerships with Canadian financial services major Sunlife for its life insurance and asset management businesses.

To map out a blueprint for its expansion, the company has appointed global consultants such as Boston Consulting Group (BCG) — which had advised the Tatas that re-entered the financial services business — and McKinsey. "The report will be ready in the next 6-8 weeks and its recommendations will shape the group's future plans," the source said.

It had followed a similar strategy for its retail business, which has now taken wings.

Ajay Srinivsan, a former Prudential executive, recently joined the group as the chief executive of its financial services business and has formed an internal panel to conduct independent research on the proposed expansion plans.

Industry observers said that the Birlas financial services' business has not been able to keep up with growth in the sector.

Analysts said that the Birlas could well be also exploring options to launch real estate and PE funds. A recent report by JP Morgan said that the $50 billion (Rs 2,02,100 crore) real estate industry in India is projected to grow at 9 per cent per annum, reaching $90 billion (Rs 3,63,780 crore) by 2011.

The proposed PE foray could raise money from abroad to fund high-growth ventures and the expansion plans of group companies. The group, which exited the securities business three years ago, is also keen on making a comeback, especially with the entry of foreign players bolstering the segment's valuations.

To pilot its massive expansion plans, the group is building up a core team, which will be led by, among others, Pankaj Razdan, who joined as deputy CEO from ICICI Prudential, while other senior professionals are likely to join up.

An official of a Mumbai-based recruitment firm said: "New hiring is happening in the asset management space."

First Published: Sep 13, 2007 20:35 IST