Adani eyes financial services, ties up with Macquarie for NBFC

MUMBAI: Billionaire Gautam Adani is taking his port-to- power conglomerate into financial services. Adani Finserv, the latest business entity in the $10-billion Adani Group, is set to launch a non-banking finance company (NBFC), possibly through a partnership with Australian giant Macquarie, as it joins a growing list of conglomerates that have branched into financial services.

Adani, 54, will pump in Rs 500 crore to float the NBFC unit, which will lend to infrastructure and real estate. Macquarie is in advanced discussions to combine its own NBFC with Adani Finserv, sources directly familiar with the matter said. Macquarie Capital’s India head Gaurav Gupta, an investment banker close to Adani, will spearhead the latter’s financial services foray and hold a small stake in the business.

Adani Finserv plans to build a full suite of financial services even as the NBFC would look to build a Rs 1,500-2,000 crore balance sheet, funding infra-building in Asia’s third largest economy. Adani Finserv is also expected to enter asset management and securities business as it looks to expand the footprint, sources added. But the ongoing discussions with Macquarie are only for NBFC operations, for the time being at least, the sources added.

Adani, Gaurav Gupta and Macquarie declined to comment on this story. Adani Finserv has already taken up space at Bandra-Kurla Complex, the financial district of Mumbai, and has started recruiting senior executives to launch operations.

Adani has had close links with Macquarie and the latest tie-up is significant in the context of the Indian group’s significant business interests in Australia. Adani’s acquisition of Carmichael coal mine at Queensland and a further buyout of Abbott Point port are significant steps for the Ahmedabad-based conglomerate, which has evolved from a trading outfit in the late-1980s into an enterprise with interests in resources, logistics, energy and agro.

Several Indian conglomerates have identified financial services as the next big growth driver as they expect domestic investors to boost investment and savings play, just like Chinese investors buoyed the market in recent years. Tata, Aditya Birla, Reliance Industries and Piramal Enterprises have built or are in the process of entering an industry which is also riding on payments banks, government’s financial inclusion initiatives and an evolving credit market for small and micro enterprises. The digitization of the fast growing economy, where the aspiring middle class is driving consumption as well as savings, offers growth opportunities.

The government’s initiatives to push people to diversify their investments, including a wider stock market participation, could be another significant trigger. Indian investors have traditionally sought real estate and gold as investments, but the recent volatility in bullion and depressed realty prices have seen a sharp rise in inflows into financial products. This, coupled with the expanding base of ultra-high net worth individuals (HNI) and family offices who are fast embracing alternate asset management strategies, are further leverage points for financial services.

India’s HNI wealth is rising at 20 per cent and is seen touching $3 trillion by the end of the current decade, according to recent research reports.

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