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Mukesh Ambani, India's richest man goes on a 289b rupee shopping spree
RELIANCE Industries Ltd, India's second-largest company by market value, has been on a shopping spree this past year, with a focus on expanding the draw of its consumer offerings.
Helmed by India's richest man Mukesh Ambani, the company has struck at least 12 deals over 12 months with an estimated tab of about 289 billion rupees (S$5.7 billion), according to calculations by Jefferies Group LLC and Bloomberg. Ten of these are related to his consumer business.
Mr Ambani has also capitalised on India's ongoing bad-debt issues with purchases of distressed or insolvent companies including a local textile-maker, a carbon-fibre firm and the wireless assets of an indebted telecom company.
For a conglomerate better known for building massive projects including the world's largest refining complex, this recent acquisitive streak reflects Mr Ambani's ambition to make his telecom, retail and media offerings as profitable as the legacy petrochemicals and refining businesses.
It also traces his pivot towards building an integrated digital offering around carrier Reliance Jio Infocomm Ltd with purchases in the entertainment and artificial intelligence-based education space.
Some of these acquisitions are basically Reliance "trying to grab content", said Deven Choksey, managing director at Mumbai-based KR Choksey Shares and Securities. "If they end up generating enough content, you can be reasonably sure that users will come on their network."
Mr Ambani has also been able to cherry pick debt-laden assets as local lenders scramble to resolve their US$210 billion in stressed loans, Mr Choksey said.
Clear e-commerce plans could become a driver for re-rating the stock, brokerage CLSA said in a July 3 report. The fibre-to-the-home broadband service has the potential to alter the segment's competitive landscape, credit rating company S&P Global Ratings has said.
Reliance has committed about US$1.3 billion to acquisitions in the two years through to March 31, 2019, Jefferies India analysts led by Somshankar Sinha estimated in a report on Tuesday.
The count excluded the Rhea Retail Pvt Ltd deal and a proposed 173 billion-rupee acquisition of spectrum, mobile-phone towers and fibre assets from Reliance Communications - the largest among recent transactions.
Overall, Reliance has invested about US$53 billion in a range of businesses from telecom, retail and petrochemicals to real estate.
Telecom alone has sucked up more than US$36 billion. Debt has climbed three-fold over five years to about US$32 billion at the end of March. BLOOMBERG