The Rs 29,000-Cr Surprise ; with a Market Value of Rs 29,000 Crore and a Net Worth of Rs 8,000 Crore, the Eight-Year-Old Indiabulls Group has Sky-High Ambitions. Property Development and Consumer Finance Are the Current Thrust Areas. Retailing, Insurance, Banking, Mutual Funds, Power and Telecom Are On the Cards. Chairman Sameer Gehlaut (34) and Co- Founder Rajiv Rattan (35) Are in Build-Up Mode, but Are the Foundations Strong Enough?

Summary

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February 2000: on a wintry morning in London, four gentlemen get into a huddle at the headquarters of Mittal Steel (now Arcelor- Mittal), the world's largest steel manufacturer. It's biting cold outside, but inside an air of warm optimism prevails. Sameer Gehlaut and Saurabh Mittal, two of the co-founders of Indian stock broking upstart Indiabulls Financial Services Ltd (IBFSL), are in the last lap of negotiations for angel funding from steel baron Lakshmi N. Mittal (no relation to Saurabh Mittal). Present at the meeting are Mittal's son, Aditya Mittal, then Vice Chairman on the board of directors of LNM Holdings, and Rishi Khosla, Mittal's fund manager. The three promoters of Indiabulls (the third is Rajiv Rattan), all alumni of IIT Delhi, had mandated a Mumbai-based investment bank, Avendus Advisors, to scout around for an investor. Gaurav Deepak, co- founder of Avendus, stumbles upon Khosla, who is sniffing for potential growth stories across the globe. Aditya Mittal and Gehlaut, from Mumbai, begin negotiations on the phone. Mittal obviously liked what he heard. The numbers--an investment of $1 million at Rs 5 per share--are agreed upon telephonically. The deal is signed in London.

"It was pure gut feel that made us invest in Indiabulls. We backed the individual after we were confident about his business plans (e-trade broking) and execution capabilities," says Khosla. Adds Sameer Gehlaut, the "individual" Khosla is talking about, and the Founder & Chairman of the Indiabulls group: "Mittal saab came in as an angel investor in Indiabulls perhaps after seeing the success of similar business models in the us, of firms like Charles Schwab and E-Trade."

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The Rs 29,000-Cr Surprise ; with a Market Value of Rs 29,000 Crore and a Net Worth of Rs 8,000 Crore, the Eight-Year-Old Indiabulls Group has Sky-High Ambitions. Property Development and Consumer Finance Are the Current Thrust Areas. Retailing, Insurance, Banking, Mutual Funds, Power and Telecom Are On the Cards. Chairman Sameer Gehlaut (34) and Co- Founder Rajiv Rattan (35) Are in Build-Up Mode, but Are the Foundations Strong Enough?

The Early Days

It's an investment Mittal won't forget in a hurry. For one, it was his first in India. More importantly, it's yielded him returns of a phenomenal 100 times. 'Of all our global investments, Indiabulls has given us the highest return," beams Khosla. Mittal was back seven years later to put more money into the Indiabulls group. The difference? He was now investing at not Rs 5 per share but at Rs 531 per share (via an issue of global depository receipts, or GDRs). Mittal today has a net worth of Rs 1,200 crore in the group by virtue of LNM India Internet Ventures' 1.85 per cent in flagship IBFSL and 1.60 per cent in a recently de-merged property developer, IBREL. In addition, the global metals magnate has committed Rs 120 crore to a multi-project special economic zone (SEZ) that IBREL is putting up at Raigad in Maharashtra.

Mittal is just one investor--albeit the one with the highest profile --for whom Indiabulls has created mind-boggling wealth. Others like hedge fund giant Farallon, which invested $1.5 million at Rs 25 per share in...

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