The two billionaires also have significant overlap in green energy (File)
In June, billionaire Mukesh Ambani and his allies ran into an unexpected dilemma when debating where to train the transactional lens of their empire next.
Ambani’s Reliance Industries Ltd. was considering buying a foreign telecom company when news reached him that Gautam Adani – who a few months earlier overtook Ambani as Asia’s richest man – was the first to launch 5G airwaves in India. Were planning to bid in big sale. , according to people familiar with the matter.
Ambani’s Reliance Jio Infocomm Ltd. is the top player in India’s mobile market, while the Adani Group does not even have a license to provide wireless telecommunications services. But the idea that he could swoop on the ground for Ambani’s ambitions put the tycoon’s camp on high alert, according to people who asked not to discuss information that hasn’t been made public.
According to people familiar with the discussions, one group of associates advised Ambani to pursue overseas targets and diversify beyond the Indian market, while another advised preserving funds to face any challenges on home turf .
Ambani, valued at $87 billion, eventually never made a bid for the foreign firm, partly, the people said, because he decided it would be smarter to retain the financial firepower in the face of a challenge from Adani, which has increased his net worth. has seen more growth than anyone in the world this year – to $115 billion, based on data from the Bloomberg Billionaires Index.
After expanding peacefully in their respective fields for more than two decades, Asia’s two richest men are increasingly moving on the same ground, especially as Adani sets his vision beyond his traditional areas of focus. Huh.
It is setting the stage for a struggle with wide ramifications beyond India’s borders, as well as at home as the $3.2 trillion economy embraces the digital age, triggering a race to wealth beyond commodity-led sectors. Where Ambani and Adani made their first fortune. The emerging opportunities from e-commerce to data streaming and storage are reminiscent of America’s economic boom of the 19th century, which fueled the rise of billionaire dynasties such as the Carnegies, the Vanderbilts, and the Rockefellers.
Arun Kejriwal, founder of Mumbai investment advisory firm KRIS, which has been tracking the Indian market and two billionaires for over two decades, said both Indian families are equally hungry for growth and that means they are inevitably going to run into each other. Huh.
“Ambani and Adani will collaborate, co-exist and compete,” he said. “And in the end, the fittest will flourish.”
Representatives for Adani and Ambani’s companies declined to comment for this story.
In a public statement on July 9, the Adani Group said it had no intention of entering the consumer mobile space currently dominated by Ambani, and would only seek to build and enhance “private network solutions” from any of the companies purchased at a government auction. Will also use the airwaves. Cyber security at your airports and seaports.
Despite such remarks, there is speculation that it may eventually venture into offering wireless services to consumers.
“I don’t underestimate the calculated entry by Adani into the consumer mobile space to compete with Reliance Jio later on,” said Sankaran Manikutty, a former professor at the Indian Institute of Management in Ahmedabad. Has worked extensively on family businesses, telecommunications and strategy there and in emerging economies.
For decades, Adani’s business was focused on sectors such as ports, coal mining and shipping, areas in which Ambani remained conspicuous amid his heavy investments in oil. But in the past year, that has changed dramatically.
In March, the Adani Group was asked to explore potential partnerships in Saudi Arabia, including the possibility of buying into its giant oil exporter, Aramco, Bloomberg News reported. A few months earlier, Reliance – which still derives the majority of its revenue from crude oil-related businesses – scrapped plans to sell a 20 percent stake in its energy unit to Aramco, a transaction that was due in two years. line pipe.
There is also significant overlap of the two billionaires in green energy, with each pledging to invest more than $70 billion in a space that is heavily aligned with the priorities of Prime Minister Narendra Modi’s government. Meanwhile, Adani has started indicating deeper ambitions in digital services, sports, retail, petrochemicals and media. Ambani’s Reliance either already dominates these sectors or has big plans for them.
In telecommunications, if Adani starts targeting mass consumers, history suggests that prices may drop in the early stages of competition, but if both companies acquire a monopoly, India’s wireless space is likely to see a difference in the current market share. It is dominated by three private players. When Ambani made his initial foray into telecommunications in 2016, he offered free calls and very cheap data, an audacious move that saw costs drop across the board for consumers, but is rising again as he tightens his control. have done it.
On the surface the two men appear quite different. Ambani, 65, inherited Reliance from his father, while Adani (60) is a self-made businessman. But they also have some notable similarities. Largely media shy, the two men have a history of being fiercely competitive, taking a foothold in most areas and then dominating them. Both have excellent project execution skills, are extremely detail-oriented and are able to pursue business goals with a track record of delivering large projects, say analysts and executives who work with them.
Both are from the western province of Gujarat, Modi’s home state. Both have aligned their business strategies closely with the Prime Minister’s national priorities.
Not all of Adani’s dealmaking overlaps with that of Reliance, and has gone ahead with outlays on M&A, even as Ambani has been cautious on spending heavily overseas amid an uncertain global outlook. Adani Group acquired Haifa port in Israel for $1.2 billion in July. In May, he bought Holcim’s Indian cement units for $10.5 billion.
For now, most of Adani’s new efforts are so new that it is difficult to immediately gauge the full impact. Yet analysts agree that these two individuals could play a big role in reshaping the Indian business landscape, potentially leaving large parts of the economy in the hands of two families.
This could have clear consequences in a nation that has only seen widening income inequality during the pandemic.
Indira Hirve, director of the Center for Development Alternatives in Ahmedabad, said while India’s current economic progress is similar to the so-called Gilded Age of America in the 19th century, the South Asian country now faces the risks of rising inequality.
“The rapid diversification and overlap between them can lead to monopolies that, if they operate together, hurt smaller firms in these areas,” Hirway said. “If they start competing, it could affect the balance of the trade landscape as both groups will be fighting for resources and raw materials.”