The two conglomerates, as part of the Birlas' plan to emerge a financial services powerhouse, have recently inked a tie-up that will include formation of three equal joint ventures--in retail distribution, stock-broking and mutual funds.

A foray into insurance has also been planned as and when the IRA Bill is passed in the Parliament and new licenses issued.

Apart from buying out the Birlas' partners in two of the ventures -- Capital International's 50 per cent in the asset management company, and Marlin Partners' 33 per cent in the stock-broking company --, Sun Life has picked up an additional 17 per cent of Birla Global's stake in the latter at around Rs five crore.

The total investment committed by Sun Life in India has been pegged at Rs 130 crore, which includes equity investment in the equalventures and the Rs 40 crore as goodwill and non-compete fees.

The stock market has reacted positively to the development with the Birla Global scrip thrice hitting two-year highs on the Bombay Stock Exchange last week.

The structure of the Aditya Birla group's financial services business is likely to expand further once Birla Global's car financing and hire purchase activities is spun off into a separate company, as reported in The Financial Express earlier.

Sources said talks with some foreign companies had been held, but change in management at some of them has resulted in negotiations falling through. The tie-up, when forged, will be the group's fifth joint venture in financial services.

However, the group has not set itself a deadline within which to conclude the hive-off process, which is likely to see around Rs 300 crore of portfolio being transferred to the new company.

The Aditya Birla group, as part of the new structure of the business, has decided to convert Birla Global into anoperational holding company for the group's financial services operations. Another investment company, Birla Financial Holdings, will be the umbrella holding company.

Though the retail distribution business of Birla Global is being transferred to a separate venture Sun Life, the flagship will retain part of the retail business to supplement the group's foray into mutual funds and insurance, both of which need to be retail-driven.

Birla Global will remain only in assured returns products for which there is a strong demand from the small investors. As part of the recast, the category I merchant banking license of Birla Global has already been transferred to a subsidiary, Birla Securities. The merchant banking activites are unlikely to expanded further as it has been identified as a low-priority area.