In what could mark its foray into the real estate and hospitality sectors, Reliance Industries has sealed a $1-billion joint venture with the New York Stock Exchange-listed Vornado Realty Trust to set up a real estate fund that will develop a network of mega malls and highway shopping centres in India, not just for Reliance Retail (RRL) but also others. The joint venture with Vornado is Reliance’s fifth global partnership in three monthsthe other four being with Marks & Spencer, Vision Express, Miss Sixty and Office Depot. However, the latest partnership is important as it would deal with real estate acquisition and management, which is crucial for the viability of any retail company.
Reliance, which was averse to global partnerships in the past, has now adopted a more pragmatic approach to form joint ventures with the world’s best to capitalise on their domain expertise and brand power. Since the group is a green horn in retail and has never dealt with a consumer business on such a large scale, it wants to learn the systems and processes from experienced global companies so that it can apply them on its own retail venture. So, Reliance didn’t think too much when it had to relent majority control to global apparel and food company Marks & Spencer. Even in its JV with Vornado, Reliance may be a minority player, but the shareholding structure could not be confirmed.
Now the real estate assets of Reliance Retail will be parked with this realty fund, thus transferring a high cost base from the retail company’s balance sheet. With this, the fund becomes the official real estate supplier to RRL. Vornado, the $14-billion market cap company, develops and manages retail properties and office spaces in Washington and New York. In India, it is likely to give the much-needed push to RRL’s expansion plans, which have slowed down in recent months. It will also develop seamless malls, which will house global brands with which RRL is signing up joint ventures.
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Rcom may further dilute ~5% of Reliance Infratel through its subsidiary Reliance telecommunications infrastructure Ltd or Reliance telecom infrastructure holdings Ltd. in pre-IPO placement to a clutch of American and European investors, a deal that values the company at nearly Rs 50,000 crore, according to sources. The earlier 5% stake dilution that Reliance Infratel had made, valued the company at nearly Rs 28,000 crore. Earlier last week, Sebi cleared the initial public offering of Reliance Infratel.
Reliance Infratel, the telecom infrastructure division of Reliance Communications, would offer 10% equity to the public valued at Rs 5,000-6,000 crore. The issue proceeds are proposed to be utilised towards funding development of passive infrastructure and general corporate purposes. The re-rating in the valuation of Reliance Infratel should get reflected in the valuation of Reliance Communications going forward.
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In what is seen as one of the most significant milestones in its history, Bartronics India Ltd, a leading provider of solutions based on ATDC technologies in India, has emerged as the lowest bidder in the Bhamashah Financial Empowerment Scheme of Rajasthan Government. The bids for which were opened on May 16.
Under the scheme, the government intends covering about 50 lakh families through biometrically identifiable smart cards, and provides them financial relief. The project valued at about Rs 150 crore is one in a series of financial inclusion initiatives announced by the Finance Minister during his recent budget speech. Similar initiatives are underway in West Bengal, Bihar and some other states across the country.
While the confirmation of this order is awaited, this is seen as a major breakthrough as far as government projects are concerned. Apart from the financial inclusion project, we expect the demand to pick up further with smart cards expected to be used for variety of other applications namely driving licenses; transport application cards e.g. railway cards, PDS cards (Ration cards), MNIC (multi-purpose national ID Cards) & banking cards. With the company having garnered a major market share in the smart cards segment, BIL stands the biggest beneficiary in terms of awarding of these contracts.
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