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

Photographer: Prodip Guha / Getty Images

Mukesh Ambani has spent much of 2020 convincing Facebook Inc., Google and a lot of difficulties on Wall Street to buy their vision for one of the most ambitious corporate transformations in the world.

Now, with $ 27 billion in fresh capital, Asia’s richest man is under pressure to deliver.

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

These include the development of products for the early launch of a local 5G network next year; incorporating Facebook WhatsApp the payment service on Reliance’s digital platform; and integrating the company’s e-commerce offerings with a network of mom-and-pop physical stores across the country. Ambani is also moving forward with plans to sell one stake in Reliance’s oil and petrochemical units, a business he originally had he hopes to reduce debt and finance his high-tech pivot earlier this year.

Every move

Investors are watching Ambani’s every move as he reviews his empire – with a market value of $ 179 billion – in the midst of a pandemic, entering highly competitive industries and taking rivals out of Amazon.com Inc. Walmart Inc. shares Reliance has risen by up to 55% this year to a record high in September, but has since made gains as stakeholders look for more evidence that Ambani can execute.

“The jury came out,” said Nandan Nilekani, who co-founded Infosys Ltd. in 1981 and now serves as chairman of the approximately $ 72 billion software service provider in Bangalore. “There’s a lot of work.”

A spokesman for Reliance Industries in Mumbai declined to comment on the story.

Ambani’s empire

Asia’s richest man is turning to technology and consumer services

Sources: Reliance, data compiled by Bloomberg

As Ambani publicly embraced his new investor partnerships, including Facebook (he and Mark Zuckerberg exchanged compliments during a live broadcast the December 15 conversation), the Indian tycoon’s fundraising game was originally meant to be more of a Plan B. Its original purpose was to sells a 20% stake in Reliance’s oil and petrochemicals division to Saudi Arabian Oil Co., at an enterprise value of $ 75 billion, involving a valuation of $ 15 billion per share.

The Aramco agreement, first announced in August 2019, was to help Ambani fulfill its commitment gets rid of his company’s net $ 22 billion debt in 18 months. But as discussions with the Saudis stuck, Reliance investors became more anxious. stock it fell by 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 a few months earlier, decided to speed up the talks after the Aramco deal hit a wall, people familiar with the matter said.

Investors’ response exceeded the company’s expectations, said one of the people, with well-known supporters, including KKR & Co., Silver Lake and Mubadala Investment Co. It employs more than $ 20 billion in digital business and $ 6.4 billion in retail. Trust declared itself net of debt in June, nine months before its self-imposed deadline and Reliance shares rose.

At the annual Reliance shareholders’ meeting in July, Ambani and his older children, Isha and Akash, outlined the broad goal of their high-tech ambitions. Among the new services they promoted was a 5G wireless network since 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 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 intends to expand the platform abroad.

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

$ 54 smartphone

Reliance plans to present its 5G product line at next year’s shareholders’ meeting, which usually takes place between July and September, said one of the people. The company is also working with Google on an Android-based smartphone worth $ 54 is part of a strategy to get more Indians to use mobile data for services, including 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 seek to reach hundreds of millions of Facebook, WhatsApp and Instagram users.

Ambani’s biggest challenge now is to earn a return on these investments, said James Crabtree, author of The Billionaire Raj: A Journey Through India’s New Gilded Age.

The industries targeted by Ambani are constantly evolving, all the more so than the refining and petrochemical companies, which still account for most of Reliance’s revenues. “They always have to understand him,” Crabtree said.

Key Man Risk

There is also the challenge of “key man” risk. Ambani – Reliance’s face – does not get younger. While the company did not publicly disclose a succession plan, the Indian newspaper Mint reported in August that Ambani, whose the net worth is about $ 77 billion, he is setting up a family council and aims to complete succession planning by the end of next year.

“Any large building with a single pillar has major inherent risks,” he said Kavil Ramachandran, executive director of Thomas Schmidheiny Center for Family Business at Indian Business School.

Ambani’s supporters draw attention to his recent history of disruption. He gave up the telecommunications industry in India four years ago, offering free calls and cheap data, pushing some rivals into bankruptcy. Its wireless operator, Reliance Jio Infocomm Ltd. now has over 400 million subscribers.

“Mukesh has been a big part of this wave of innovation,” said Sundar Pichai, executive director of Alphabet Inc., which owns Google. “His vision and focus on a future where every Indian can benefit from the opportunities that technology creates is really interesting to us and we are happy to be a partner in that work.”

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