Mukesh Ambani sold a dream for $36b. Now he has to deliver

MUMBAI • Mukesh Ambani spent much of the year convincing Facebook, Google and a clutch of Wall Street heavyweights to buy into his vision for one of the world's most ambitious corporate transformations.

Now flush with US$27 billion (S$35.9 billion) in fresh capital, Asia's richest man is under pressure to deliver.

The 63-year-old Indian tycoon is focused on a handful of priorities as he tries to turn Reliance Industries from an old-economy conglomerate into a technology and e-commerce titan, according to recent public statements and people familiar with the company's plans.

These include developing products for the anticipated roll-out next year of a local 5G network; incorporating Facebook's WhatsApp payments service into Reliance's digital platform; and integrating the company's e-commerce offerings with a network of physical mom-and-pop shops across the country. Mr Ambani is also pushing forward with plans to sell a stake in Reliance's oil and petrochemical units, a deal he had originally hoped would reduce debt and finance his high-tech pivot earlier this year.

Investors are watching his every move as he overhauls his empire - with a market value of US$179 billion - in the middle of a pandemic, wading into highly competitive industries and taking on rivals from Amazon.com to Walmart. Reliance shares rose as much as 55 per cent this year to an all-time high in September, but they have since pared gains as stakeholders look for more evidence that Mr Ambani can execute.

While Mr Ambani has publicly embraced his new partnerships with investors including Facebook, the tycoon's fund-raising spree was initially meant to be more of a Plan B. His original goal was to sell a 20 per cent stake in Reliance's oil and petrochemicals division to Saudi Arabian Oil at an enterprise value of US$75 billion, implying a US$15 billion valuation for the stake.

The Aramco deal, first announced in August last year, was supposed to help him deliver on a pledge to get rid of his company's US$22 billion in net debt in 18 months.

But as talks with the Saudis stalled, Reliance investors grew more anxious. The stock tumbled more than 40 per cent in the three months to March 23.

Mr Ambani, who had begun exploring stake sales in his digital services and retail units months earlier, decided to accelerate those talks after the Aramco deal hit a wall, people familiar with the matter said.

The response from investors exceeded the company's expectations, one of the people said, with big-name backers including KKR & Co, Silver Lake and Mubadala Investment committing more than US$20 billion to the digital business and US$6.4 billion to retail. Reliance declared itself free of net debt in June and its shares surged.

At the company's annual shareholder meeting in July, Mr Ambani and his eldest children Isha and Akash sketched out the broad thrust of their high-tech ambitions. Among the new services they touted was a 5G wireless network as early as 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's digital unit, Jio Platforms, will also develop a portfolio of technology solutions and apps for India's millions of micro, small and medium-sized businesses, Mr Ambani said, adding that he plans to eventually expand the platform overseas.

"The time has come for a truly global digital product and services company to emerge from India," he told shareholders.

The company's biggest priority for next year is 5G, people familiar with the matter said. While regulators have yet to auction rights to India's next-generation airwaves, Mr Ambani said this month that his company "will pioneer the 5G revolution in India in the second half of 2021".

Reliance is planning to showcase its line-up of 5G products at next year's shareholder meeting, which typically takes place some time between July and September, one of the people said. The company is also working with Google on an Android-based US$54 smartphone, part of the strategy to get more Indians to use mobile data for services including streaming video, online games and shopping.

Reliance views the integration with WhatsApp's recently approved payments system as a crucial step in the development of its online shopping services, the people said. The companies are working together as Reliance's e-commerce platforms look to tap hundreds of millions of Facebook, WhatsApp and Instagram users. Mr Ambani's biggest challenge now is to earn a return on these investments, said Mr James Crabtree, author of The Billionaire Raj: A Journey Through India's New Gilded Age.

There's also the challenge of "key man" risk. Mr Ambani - the face of Reliance - isn't getting any younger. While the company has not publicly disclosed a succession plan, India's Mint newspaper reported in August that the tycoon, whose net worth is about US$77 billion, is setting up a family council and aims to complete succession planning by the end of next year.

"Any large, single-pillar edifice has major inherent risks," said Professor Kavil Ramachandran, executive director of the Thomas Schmidheiny Centre for Family Enterprise at the Indian School of Business.

Mr Ambani's supporters point to his recent track record of disruption. He famously upended India's telecommunications industry four years ago by offering free calls and cheap data, pushing some rivals into bankruptcy.

"Mukesh has been a big part of this wave of innovation," said Mr Sundar Pichai, chief executive officer of Alphabet, which owns Google. "His vision and focus of a future where every Indian can benefit from the opportunities technology creates is really exciting to us and we are glad to be a partner in that work."

BLOOMBERG