Bharti Enterprises said it will sell its entire interest in its two joint ventures with AXA, both Life and General Insurance, to Reliance Industries Ltd, controlled by Mukesh Ambani.
“Currently, the financial services ventures do not fit into Bharti’s long term growth plans. Bharti intends to use the proceeds from selling off its interests in these joint ventures towards other group businesses in India and abroad,” Bharti said.
The move means Mukesh will enter the financial sector primarily through this route, instead of the much hyped DE Shaw joint venture. The latter is likely to focus more on the institutional financial services business — such as asset management, banking etc..
“The decision is in line with Bharti’s strategy of focusing its energies and financial resources in businesses where it is making a deeper impact both in India and overseas,” Bharti added.
The transaction is seen as the result of Bharti’s focus on telecom, particularly in emerging markets such as Africa.
Bharti had entered into these joint ventures with the AXA Group in 2006 and held 74% stake in both these ventures – Bharti AXA Life Insurance and Bharti AXA General Insurance. Bharti is already in the process of offloading its stake in its other joint venture with AXA for asset management, it said.
Financial terms have not been revealed.
Mukesh Ambani has been in the process of evaluating his options for entry into financial services. Under a 2005 agreement with his younger brother Anil, Ambani had promised not to enter any space in which Anil was present. Anil is present in the financial services market through Reliance Capital, Reliance Money etc..
However, a year ago, the brothers decided to annul the non-compete agreement, allowing Mukesh to announce his investment in Infotel Broadband — India’s only holder of nationwide wireless broadband spectrum.