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

Reliance Industries is India’s largest private sector company, with a consolidated turnover of $87.1bn and a net profit of $5.3bn for the year ended March 2020.

(FILES) In this file photo taken on October 25, 2018 India's richest man and oil-to-telecom conglomerate Reliance Industries chairman Mukesh Ambani attends the India Mobile Congress 2018 in New Delhi. With global tech giants pumping billions into Reliance, India's richest man is ready to battle Amazon and Walmart for the country's huge e-commerce market. But analysts say it's far from certain that Mukesh Ambani's latest big gamble will pay off. - TO GO WITH AFP STORY INDIA-ECONOMY-RETAIL-ECOMMERCE-RELIANCE-AMBANI,FOCUS BY AMMU KANNAMPILLY
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Reliance Industries, the conglomerate owned by Asia’s richest man, is ploughing billions into Indian debt funds after receiving cash from stake sales and a rights issue, according to people with knowledge of the matter.

The money has been put into ultra-short and money-market funds, and others focused on debt with an average of three- to five-year maturities, according to fund managers.

Mukesh Ambani’s deal-making lured about $20 billion (Dh73.5bn) of investment 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 in the past weeks has become the talk of India’s financial markets, with money managers positioning for a slice of the pie.

The conglomerate, with interests in petrochemicals, retail and telecoms, may have invested as much as 350 billion rupees (Dh17.2bn) across the nation’s debt houses, according to estimates by two of the money managers.

“‘Lately, we have seen sharp inflows into mutual funds’ debt plans from a large conglomerate,” said Dhirendra Kumar, chief executive at Value Research, a mutual fund advisory firm, without naming the company.

“I expect this to continue for some more time.”

A Reliance representative declined to comment.

Foreign currency traders have pointed to the deluge of Reliance-related money pouring into the nation in recent weeks, which helped the rupee advance more than 1 per cent in the past 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. So far, the company has received about 1.2 trillion rupees from the Jio investments, according to a tally of company filings.

The Reliance money is for longer-term investment, and is not just parked with the funds, according to two of the people.

The Indian company may be taking a bet on the interest-rate cycle with 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 per cent 2025 bond yield has dropped 19 basis points this month, more than the eight basis points decline in the benchmark 10-year yield.

Reliance’s influence in the financial market has in the past also drawn attention.

Last 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 more than 70bn rupees into funds betting on interest rate declines.