How did Mukesh Ambani flourish during COVID-19 crisis?

Sruthi Vibhavari

As the pandemic continues to ravage the world economies and businesses, Mukesh Ambani’s Reliance Industries Ltd. has become the first Indian company to reach the $150 billion market valuation mark. Early this week, Mukesh became the world’s sixth richest person with a net worth of $72.4 billion, surging past tech titan Elon Musk and Alphabet co-owners Larry Page and Sergey Brin, according to the Bloomberg’s Billionaire’s Index.

RIL debt-free, thanks to investments

Mukesh also managed to make RIL a net-debt free company much before its target of achieving that very goal by March 2021. The flurry of investments has resulted in RIL’s valuation soaring even at a time when others are struggling to come out of the COVID-induced losses.

Shares of the conglomerate have more than doubled from a low in March as its digital unit Jio got billions in investments from companies including Facebook, Silver Lake and, most recently, Qualcomm. Jio Platforms received a whopping investment of about Rs. 1.15 lakh crores in 12 cheques from foreign companies. The companies now hold around 25 per cent of the Jio platform’s equity.

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In RIL’s Annual General Meeting held virtually on Wednesday, July 15, Ambani announced that Google will invest $4.5 billion for a 7.7 per cent stake in Jio Platforms and that he was excited about Google’s partnership with Jio.

These investments were followed by over 84,000 crores raised by RIL through a rights issue in the month of June. It garnered huge investor interest and was over-subscribed 1.59 times. In a statement, Mukesh Ambani thanked thousands of the company’s small investors and institutional investors for participating in the rights issue and ‘making it a new and proud landmark in the history of India’s capital market.’

He operates on a 3S strategy – size, scale and speed. This explains his ease with securing astonishing amounts of funding for Jio via disinvestment and rights issue, which enabled RIL to emerge as a debt-free enterprise.

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Saudi Aramco’s deal fails to seal

However, there is one blot on his otherwise extraordinary year of investments.

The mega-deal with Saudi Arabia’s Aramco — for a 20 per cent stake in RIL’s oil-to chemicals venture — was announced at last year’s AGM. Though Ambani did not announce that the deal fell through, this delay in the $15 billion deal led to the dampening of optimism that prevailed. After news of the deal’s spread, the stocks of RIL tumbled on the Bombay Stock Exchange yesterday — 3.71 per cent lower than the previous day’s close.

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