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Asia's richest man saw wealth surge US$18b this year

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It's been a good year for Asia's richest man, Mukesh Ambani. The Indian tycoon added almost US$18 billion to his wealth, the most in Asia, taking his net worth to US$61.9 billion, according to the Bloomberg Billionaires Index.

[MUMBAI] It's been a good year for Asia's richest man, Mukesh Ambani. The Indian tycoon added almost US$18 billion to his wealth, the most in Asia, taking his net worth to US$61.9 billion, according to the Bloomberg Billionaires Index.

In comparison, Alibaba Group founder Jack Ma's net worth grew US$11 billion, while Jeff Bezos lost US$13.6 billion.

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

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 Amazon.com in India, Mr Ambani has spent almost US$50 billion - 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$3 billion in assets in Mumbai.

"He successfully identified, invested and executed rapidly to create this new narrative," Mr 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, Mr 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.

Mr 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-to-chemicals business to Saudi Arabian Oil, 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, 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 350 million users, unlisted Jio reported a net income of 9.96 billion rupees (S$181.7 million) 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$76 billion in the last five years. Reliance Industries had a net debt of 1.54 trillion rupees (S$29.3 billion) at the end of March 31, Mr Ambani told shareholders in August.

Aiding Reliance's efforts to cut debt would be:

The transaction with Aramco has run into a hurdle that threatens to jeopardise Mr 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.

Mr 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."

BLOOMBERG