The priority for the financial services joint venture company between the DE Shaw group (global private equity and hedge fund company that manages over $ 20 billion of funds) and Reliance Industries will be investment banking, said Mr Louis Salkind, a Managing Director and member of the Executive Committee of the DE Shaw group.

Institutional brokerage, market making services, and various types of advisory and underwriting services for corporates and institutions would be the second piece of the puzzle. And asset management will be the third piece, said Mr Salkind who is in India to give shape to the initial phase of the joint venture, whose operations will start sometime in the first quarter of 2012.

Recently DE Shaw and RIL decided to form an equal joint venture in financial services. The company will be called DE Shaw India Financial Services Private Ltd, pending regulatory approval.

The firm will be getting approvals and structures in place for its various activities over the next 18 months, during which period it will hire roughly 100 persons. (Its hiring process involves a rigorous 20-25 stage interviews, said India head, Mr Anil Chawla).

Priority

The first activity off the block will be its investment banking operations from an NBFC platform, said Mr Anil Chawla, CEO of DE Shaw India Advisory Services Pvt Ltd.

And what will differentiate it from competition? “First I think many of the competition will not deploy capital in terms of supporting their companies. We would do that,” said Mr Salkind. “Secondly, we can provide a range of information advisory services using our extensive collections of information and data, both from the financial point of view and from a strategy point of view.”

Currently in India, one sees either totally local players, or totally foreign players in this activity, added Mr Chawla. “Here we have a joint venture with the expertise of a foreign player and RIL's local knowledge in infrastructure and access to capital.”

Members

The six-member board of directors of the joint venture will consist of three from DE Shaw, including Mr Salkind and Mr Chawla. Three would be from RIL, including Mr Alok Agarwal, currently Chief Financial officer of the company. Independent business units would be led by divisional heads who would report to the Board.

Much of the firm's activities will be technology driven, said Mr Salkind: “The trading technology that we have developed and use in managing our own funds, that is the same technology we would apply in making markets for our clients, and sensibly commit capital, and provide liquidity to our institutional clients.

The firm will also be acting in the capacity of a merchant bank, “because our skill set is about risk management and deploying capital. You have to be able to selectively deploy capital to facilitate raising additional capital. We would be different this way, as opposed to just being a boutique firm or a large bank,” said Mr Salkind.

In the case of asset management, mutual fund operations could be eventually considered, but for starters, the company would focus more on high networth individuals and institutions, said Mr Salkind. “In our asset management activity our focus will be to raise money from domestic clients and our initial set of products will focus more on private investment vehicles.”

As a private equity investor DE Shaw has over the last five years invested $ 1.2 billion in India in around 15 companies. However, going forward its India activities will be largely through its new joint venture with RIL.

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