Asia’s rich­est man Mukesh Am­bani added $17bn to his for­tune dur­ing this year

Muscat Daily - - BUSINESS -

Mum­bai, In­dia - It’s been a good year for Asia’s rich­est man, Mukesh Am­bani.

The In­dian ty­coon added al­most US$17bn to his wealth as of De­cem­ber 23, the most in Asia, tak­ing his net worth to about US$61bn, ac­cord­ing to the Bloomberg Bil­lion­aires In­dex. In com­par­i­son, Alibaba Group founder Jack Ma’s net worth grew US$11.3bn, while Jeff Be­zos lost US$13.2bn.

The surge in Am­bani’s for­tune this year was fu­eled by a 40 per cent jump in the shares of his Re­liance In­dus­tries Ltd, a con­glom­er­ate that’s piv­ot­ing more to­wards con­sumer of­fer­ings than its core oil re­fin­ing and petro­chem­i­cals busi­nesses. The rally in the stock is more than dou­ble the gains for In­dia’s bench­mark S&P BSE Sen­sex in­dex dur­ing the pe­riod.

In­vestors are pil­ing money on Re­liance, bet­ting newer busi­nesses such as telecom­mu­ni­ca­tions and re­tail could soon un­lock value. With a goal of build­ing a lo­cal e-com­merce gi­ant to chal­lenge the likes of Ama­ Inc in In­dia, Am­bani has spent al­most US$50bn - mostly debt - on a wire­less car­rier that’s be­come In­dia’s No 1 within three years of de­but.

‘Mukesh Am­bani changed the nar­ra­tive for Re­liance In­dus­tries’ as a leader not just in oil and gas but also in tele­com and re­tail, and pos­si­bly soon in e-com­merce as well, said Chakri Lokapriya, chief in­vest­ment of­fi­cer at TCG As­set Man­age­ment, which over­sees US$3bn in as­sets in Mum­bai.

“He suc­cess­fully iden­ti­fied, in­vested and ex­e­cuted rapidly to cre­ate this new nar­ra­tive,” Lokapriya said. “We be­lieve this can po­ten­tially dou­ble share­holder value over the next four years.”

The newer busi­nesses are likely to con­trib­ute 50 per cent of Re­liance’s earn­ings in a few years, from about 32 per cent now, Am­bani said in Au­gust. A rep­re­sen­ta­tive for Re­liance didn’t re­ply to an email seek­ing com­ment on Am­bani’s wealth.

Zero net debt

While the suc­cess of the phone op­er­a­tor was a cause for cheer, the busi­ness mogul’s plans to pare Re­liance’s debt has sent Re­liance’s stock soar­ing to a record.

Am­bani (62) has vowed to slash the group’s net debt to zero by early 2021. Plans in­clude a stake sale in Re­liance’s oil-to­chem­i­cals busi­ness to Saudi Ara­bian Oil Co, list­ings of the telecom­mu­ni­ca­tions and re­tail units within five years, sale of tower as­sets and strate­gic part­ners for a dig­i­tal plat­form linked to Re­liance Jio In­fo­comm Ltd, the phone com­pany.

The value of Re­liance’s shares have al­most tripled since the end of 2016, when Jio en­tered the In­dian mar­ket with free calls and cheap data and forced some heav­ily in­debted in­cum­bents to exit or merge with ri­vals. With more than 350mn users, un­listed Jio re­ported a net in­come of R9.96bn (US$140mn) for the Septem­ber quar­ter while the other two pri­vate sec­tor op­er­a­tors amassed record losses.

Still, in­vestors have been wary of the bal­loon­ing debt at the group that spent about US$76bn in the last five years. Re­liance In­dus­tries had a net debt of R1.54tn at the end of March 31, Am­bani told share­hold­ers in Au­gust.

The pro­posed trans­ac­tion with Aramco has run into a hur­dle, threat­en­ing Am­bani’s debt par­ing plans. An In­dian court has sought de­tails of Re­liance’s as­sets af­ter the In­dian gov­ern­ment pe­ti­tioned to stop the pro­posed sale in an un­re­lated ar­bi­tra­tion law­suit. Am­bani, how­ever, has a proven record in keep­ing his prom­ises that in­vestors are re­ly­ing on.

“Am­bani cre­ated value in Jio, which he delever­aged by hiv­ing off his in­fra­struc­ture as­sets to Brook­field,” said San­deep Gupta, man­ag­ing di­rec­tor, Pro­tiv­iti In­dia. “He can fur­ther delever­age the com­pany from a debt point of view by bring­ing in strate­gic in­vestors, which will raise the value fur­ther.”

Mukesh Am­bani

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