India's Reliance plows billions from stake sales into debt funds

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Reliance Industries, the conglomerate owned by Asia’s richest man, is plowing billions into Indian debt funds after receiving cash from stake sales and a rights issue, according to persons with knowledge of the problem.

The monies have already been deployed into ultra-short and money-market funds, and others focused on debt with typically three-to-five year maturities, according to invest in managers who asked never to be discovered in discussing investment details.

Mukesh Ambani’s dealmaking lured about $20 billion of investments from Google to Facebook into his digital platform in recent months, raising much anticipation over his plans for the money. The scale of Reliance’s fund flows during the past weeks has become the talk of India’s financial markets, with money managers positioning to acquire a slice of the pie.

The conglomerate, with interests spanning petrochemicals, retail and telecom, may have deployed as much as 350 billion rupees (Dh44bn) across the nation’s debt houses, according to estimates by two of the amount of money managers.

“‘Lately, we have seen sharp inflows into mutual funds’ debt plans from a sizable conglomerate,”’ said Dhirendra Kumar, chief executive officer at Value Research, a mutual fund advisory firm, without naming the business. “I expect this to continue for some more time.”

A Reliance spokesperson declined to comment.

Forex traders have pointed to the deluge of Reliance-related money pouring in to the nation in recent weeks, which helped the rupee advance a lot more than 1 per cent previously month to become Asia’s best-performing currency.

In June, Reliance said it became free of net debt after selling stakes in Jio Platforms, its digital unit, its energy business, as well completing a rights issue. Up to now, the business has received some 1.2 trillion rupees from the Jio investments, according to a tally of company filings.

The Reliance money is for longer-term investment, and isn’t just parked with the funds, according to two of the people. The Indian corporate giant could be taking a bet on the interest-rate cycle using its investments, one person said.

The fund flow is adding to the rally in short-duration bonds, with banks and investors also jumping into such debt amid expectations for more rate cuts by the Reserve Bank of India. The 5.22 % 2025 bond yield has dropped 19 basis points this month, a lot more than the eight basis points decline in the benchmark 10-year yield.

Reliance’s influence in the financial market has during the past also drawn attention. This past year, the company and a unit accounted for more 60 per cent of a currency swap auction held by the central bank. Back in 2017, it dropped a lot more than 70bn rupees into funds betting on interest-rate declines.
Source: https://www.thenational.ae

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