Ambani sold a technical dream for $ 27 billion. Now he has to deliver

Photographer: Prodip Guha / Getty Images

Mukesh Ambani spent much of 2020 convincingly Facebook Inc., Google and a lot of Wall Street heavyweights to join their vision of one of the most ambitious corporate transformations in the world.

Now, with $ 27 billion in fresh capital, Asia’s richest man is pressured to hand it over.

The 63-year-old Indian tycoon focuses on a handful of priorities as he tries to spin Reliance Industries Ltd., a conglomerate of the former economy, has become a technology and e-commerce titan, according to recent public statements and people familiar with the company’s plans.

These include product development for next year’s planned launch of a local 5G network; incorporating Facebook WhatsApp payment service on the Reliance digital platform; and integrate the company’s e-commerce offerings with a network of physical mom-and-pop stores across the country. Ambani is also moving forward with plans to sell one participation in Reliance’s petrochemical and oil units, an agreement it originally had it hoped to reduce debt and finance its high-tech pivot earlier this year.

Every move

Investors are watching all of Ambani’s moves as he reviews his empire (with a market value of $ 179 billion) amid a pandemic, entering highly competitive industries and taking on rivals Amazon.com Inc. a The shares of Walmart Inc. Reliance rose to 55% this year to an all-time high in September, but they have since made gains as stakeholders look for more evidence that Ambani can run.

“The jury is out,” said Nandan Nilekani, who was a co-founder Infosys Ltd. in 1981 and now chairs the Bangalore-based software service provider, valued at about $ 72 billion. “There’s a lot of work to be done.”

A Bombay-based Reliance Industries spokesman declined to comment on the story.

The Empire of Ambani

Asia’s richest man pivots on technology and consumer services

Sources: dependency, data compiled by Bloomberg

Although Ambani has publicly adopted his new partnerships with investors, including Facebook (he and Mark Zuckerberg exchanged praise during a live broadcast December 15 conversation), the Indian tycoon’s fundraising draft was initially to be a plan B. sell a 20% stake in Reliance’s petrochemical and oil division a Saudi Arabian Oil Co., with a business value of $ 75 billion, implying a valuation of $ 15 billion for the stake.

The Aramco deal, first announced in August 2019, was to help Ambani deliver on its promise get rid of your company’s $ 22 billion in net debt in 18 months. But as conversations with the Saudis stopped, dependency investors became more anxious. The stock fell more than 40% in the three months to March 23rd.

Hit A Wall

Ambani, who had begun exploring stake sales in its digital services and retail units months earlier, decided to speed up those talks after the Aramco deal hit a wall, people familiar with the matter said.

One person said investors’ response exceeded the company’s expectations, with large sponsors KKR & Co., Silver Lake i Mubadala Investment Co. commits more than $ 20 billion to the digital business and $ 6.4 billion to the retailer. Confidence was declared debt-free in June, nine months before the self-imposed deadline and Reliance shares rose.

At Reliance’s annual shareholders ’meeting in July, Ambani and his eldest sons Isha and Akash outlined the overall focus of their high-tech ambitions. Among the new services they were promoting were a 5G wireless network as early as next year and a video streaming platform that will bring Netflix, Disney + Hotstar, Amazon Prime Video and dozens of TV channels under one umbrella.

Reliance’s digital unit, Jio Platforms Ltd., will also develop a portfolio of technology solutions and applications for millions of micro, small and medium enterprises in India, Ambani said, adding that it plans to expand the platform overseas.

The company’s highest priority for 2021 is 5G, people familiar with the issue said. While regulators have not yet auctioned off rights to India’s next-generation airwaves, Ambani said this month that his company “will be a pioneer in the 5G revolution in India during the second half of 2021.”

$ 54 smartphone

One person said Reliance plans to present its 5G product range at next year’s shareholders ’meeting, which usually takes place between July and September. The company is too Working with Google on a $ 54 Android-based smartphone is part of the strategy to get more Indians to use mobile data for services such as video streaming, online gaming and shopping.

Reliance recently sees integration with WhatsApp the payment system approved as a crucial step in the development of its online shopping services, people said. Companies are working together as Reliance’s e-commerce platforms want to take advantage of hundreds of millions of Facebook, WhatsApp and Instagram users.

Ambani’s main challenge now is to get a return on those investments, said James Crabtree, author of “The Billionaire Raj: A Journey Through India’s New Gilded Age”.

The industries to which Ambani targets are constantly evolving, much more so than the refining and petrochemical companies that still make up most of Reliance’s revenue. “You have to get it right over and over again,” Crabtree said.

Key Man Risk

There is also the challenge of the “key man” risk. Ambani, Reliance’s face, doesn’t get younger. Although the company has not publicly disclosed any succession plan, the newspaper Mint of India reported in August that Ambani, of whom net worth is about $ 77 billion, creates a family council and aims to complete succession planning by the end of next year.

“Any large single-pillar building has great inherent risks,” he said Kavil Ramachandran, executive director of the Thomas Schmidheiny Center for Family Enterprise al India Business School.

Ambani’s followers point to his recent history of disorders. Four years ago it famously gave up the telecommunications industry of India by offering free calls and cheap data, pushing some rivals into bankruptcy. Your wireless carrier, Reliance Jio Infocomm Ltd., now has over 400 million subscribers.

“Mukesh has been a big part of this wave of innovation,” said Sundar Pichai, CEO of Alphabet Inc., owner of Google. “His vision and focus on a future where all Indians can benefit from the opportunities that technology creates is really exciting for us and we are excited to be a partner in this work.”

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