Ambani estate, 5G, IPOs and spin-offs focus at Reliance investor meeting

Mukesh Ambani’s annual speech to investors has evolved over time into a much-anticipated statement about his $222 billion empire, akin to Warren Buffett’s annual letters to Berkshire Hathaway shareholders.

This year, Reliance Industries investors will seek information Monday on the company’s 5G rollout, how it plans to unlock value in its telecom and retail units through separate listings, and when and how. his children will take the reins. .

Anticipation is high as the 65-year-old billionaire, who has made Reliance India’s biggest company by market value and a powerful conglomerate, used the speech for a series of big announcements.

These include the launch of its disruptive telecommunications service in 2016, Saudi Arabian Oil’s proposed investment in Reliance’s energy business in 2019 and a strategic shift to green energy last year.

This year’s shareholders’ meeting comes as the retail refining group faces the twin challenges of a global recession and the meteoric rise of Gautam Adani, who has eclipsed Mr Ambani as the most wealthy Asia earlier this year and is emerging as an alternative center of power on the corporate landscape.

Reliance investors will be mindful of how Mr Adani’s conglomerate split its business into different listings years ago, unlocking value, and will expect “clarity and specific timelines for the next big things” from Ambani’s more centralized holdings, said Kranthi Bathini, equity strategist. at WealthMills Securities in Mumbai.

Mr Adani’s wealth has jumped $58 billion this year on the back of the rally in stocks, compared to $3.3 billion for Ambani.

Here’s where investors expect:

Succession

The patriarch indicated that succession planning at Reliance will be accelerated at last year’s shareholder meeting and reiterated this explicitly in December.

His three children, his daughter Isha and his sons Akash and Anant, already hold various directorships in unlisted companies in the group and are gaining visibility in their leadership.

Mr. Ambani stepped down as chairman of Reliance Jio Infocomm in June, making way for his eldest son, Akash, who took over as head of India’s largest wireless operator.

As rumors continue to swirl around Mr. Ambani’s health, investors will be looking for more concrete steps to take in the leadership transition, with Isha, Anant and possibly his wife, Nita, taking on more responsibility.

5G deployment

Reliance Jio Infocomm has bought airwaves worth more than $11 billion in a local spectrum auction as it seeks to cement its advantage over smaller rivals – Bharti Airtel and Vodafone Idea – in the deployment of faster 5G networks.

This will be the key to increasing revenue and attracting high-value users.

Investors will be looking for proof of the pudding here. The technology has yet to bring benefits to Asian wireless operations despite investing billions of dollars, even for those in China that have been offering 5G service since 2019.

Details such as a nationwide rollout date, price plans for 5G services as well as demand for the service will be crucial for Reliance Jio to reveal.

Ambani children can demonstrate some of the key features of 5G services at the meeting, just as they have showcased new telecom products in the past.

Wedding reception in Ambani — in pictures

Akash Ambani (L), son of Reliance Industries Chairman Mukesh Ambani and his wife Shloka Mehta pose for photos during their wedding reception in Mumbai, India, March 10, 2019. Akash Ambani is married to Shloka Mehta March 09, 2019. Photo: EPA

Spin-offs, IPOs

The street has been waiting for more clarity on Reliance Jio and Reliance Retail’s initial public offerings, especially after the two consumer companies raised $27 billion from high-profile global investors in 2020.

Both companies are market leaders in their respective industries with a formidable lead over their rivals. Their listings — or even spinoffs — could propel Mr. Ambani’s net worth.

“Timeliness is critical to recovering the mojo from Reliance’s stock,” Ms. Bathini said.

Confidence has gained roughly 11% this year compared to the more than 40% rise recorded by the best performers of the S&P BSE Sensex.

New energy, old energy

The $76 billion pivot to green energy is the biggest transformation Mr. Ambani is currently leading.

It’s also a tough transition given the conglomerate’s roots in petrochemicals and crude oil refining and the continued outsized contribution of fossil fuel-focused businesses to Reliance’s annual revenue.

Investors will be looking for updates on plans announced last year to build four gigafactories to manufacture solar modules, hydrogen electrolyzers, fuel cells and storage batteries.

Mr. Ambani has also been on the verge of acquiring small green energy companies around the world for their expertise and technology. It is also expected to become one of the world’s leading blue hydrogen manufacturers.

Go global

Mr. Ambani outlined his vision for “internationalizing Reliance” in his speech last year.

Over the past year, Reliance has made overtures to big deals overseas, such as a potential acquisition of UK pharmacy chain Boots, which was never finalized.

Investors will want to see if the appetite for global acquisitions still exists amid a slowing global economy.

Updated: August 27, 2022, 05:29