Succession, Spinoffs in Focus in Billonaire Ambani’s Big Speech

(Bloomberg) — Mukesh Ambani’s once-a-year address to investors has evolved over time into a much-anticipated announcement about his $222 billion empire similar to Warren Buffett’s annual letters to Berkshire Hathaway shareholders.

Most Read by Bloomberg

This year, investors in Reliance Industries Ltd. of the Indian billionaire will seek information on the group’s 5G development, how Ambani plans to unlock the value of his telecom and retail units through separate listings and when and how his children will take over. reins.

Expectations are high as the 65-year-old tycoon, who built Reliance into India’s largest company by market value and a conglomerate of powerful companies, has used the speech in the past for a series of big announcements. These include the launch of its disruptive telecommunications service in 2016, the proposed investment by Saudi Arabian Oil Co. in Reliance’s energy business in 2019 and a strategic shift towards green energy last year.

This year’s shareholder meeting, set for Monday, comes as the retail refining group grapples with the twin challenges of the global recession and the meteoric rise of Gautam Adani, who has eclipsed Ambani as India’s — and the country’s — richest man. of Asia — earlier this year and is emerging as an alternative powerhouse in the corporate landscape.

Trust investors will bear in mind how the Adani group split its operations into different listings years ago, unlocking value, and expect “clear and concrete timelines for the next big things” from Ambani’s most concentrated holdings, Kranthi Bathini , equity strategist at Mumbai-based WealthMills Securities Pvt. Adani’s fortune has grown by $59.8 billion this year, sending shares soaring and eclipsing Ambani’s $2.8 billion increase.

Here’s what investors are waiting for:

Succession

The patriarch indicated that succession planning at the top of Reliance would be expedited at last year’s shareholder meeting and reiterated this explicitly in December. His three children — daughter Isha and sons Akash and Anant — already hold various managerial positions in the group’s unlisted companies and are becoming more visible in their leadership.

Ambani Looks to Walton Family Playbook on Succession

Ambani resigned as chairman of Reliance Jio Infocomm Ltd. in June, making way for his eldest son, Akash, who took the helm of India’s largest wireless company. With rumors swirling around Ambani’s health, investors will be looking for more concrete steps in the leadership transition, with Isha, Anant and possibly Ambani’s wife Nita taking on more responsibilities.

5G rollout

Reliance Jio Infocomm bought more than $11 billion worth of airwaves in India’s spectrum auction as it sought to consolidate its lead over smaller rivals Bharti Airtel Ltd. and Vodafone Idea Ltd., in developing faster 5G networks. This will be key to boosting revenue and attracting high-value users.

India sells $19 billion of Airwaves with Reliance as top buyer

Investors will look for the proof of the pudding here. The technology has yet to turn a profit for Asian wireless carriers despite multi-billion dollar investments, even those in China offering 5G services from 2019. Details such as nationwide rollout date, pricing plans for 5G services and where the demand for The service will be crucial for Reliance Jio to unveil.

The Ambani kids may showcase some of the key features of 5G services at the meeting, just as they have showcased new telecom products in the past.

Spinoffs, IPOs

Market watchers had been waiting for more clarity on the initial public offerings of Reliance Jio and Reliance Retail Ltd., especially after the two consumer-focused businesses raised $27 billion from investors globally in 2020.

Ambani sold a Tech Dream for $27 billion. Now he must deliver

Both companies are market leaders in their respective fields with a formidable lead over competitors. Their listings — or even spinoffs — could boost Ambani’s net worth. “Timelines are crucial to get the mojo back for the Reliance stock,” Bathini said. Reliance has gained about 11% this year, compared with a more than 40% rise by the top performer in India’s S&P BSE Sensex.

New Energy, Old Energy

The $76 billion shift to green energy is the biggest transformation Ambani has led so far. It is also a difficult transition given Reliance’s roots in petrochemicals and crude oil refining and the continued outsized contribution of fossil fuel-based businesses to the conglomerate’s annual revenue.

Ambani says Green Push to outdo other Reliance businesses

Investors will be looking for updates on plans announced last year to build four gigafactories to make solar modules, hydrogen electrolytes, fuel cells and storage batteries. Ambani has also started acquiring small green energy companies globally for expertise and technology. There are also plans to become one of the world’s leading manufacturers of blue hydrogen.

Going Global

Ambani highlighted his vision to “internationalize Reliance” in his speech last year.

Over the past year, Reliance has made moves toward major overseas deals, including a potential takeover of British drugstore chain Boots, which never materialized. Investors will want to see if the appetite for global acquisitions is still there amid a slowing global economy.

Then there’s always the possibility of a curve ball in the meeting, Battini said. “Never underestimate the power of the senior Ambani” to surprise the market, he said.

Most Read by Bloomberg Businessweek

©2022 Bloomberg LP

Leave a Reply

Your email address will not be published. Required fields are marked *