TOKYO – This year must have been a glorious year for Asia’s richest tycoon, Mukesh Ambani, chairman of Reliance Industries, India’s most valuable record company and second-largest conglomerate with revenue total entry into the country.
Starting in April, the oil-telecom-selling group won votes from two American tech giants, Facebook and Google, in the form of strategic investments in Jio Platforms, a subsidiary of mobile telecom and internet service of the group. Jio also drew support from prestigious private funds, including Silver Lake Partners, KKR, TPG and the investment arms of chip makers Intel and Qualcomm.
These investments raised a total of 1.52 trillion rupees ($ 21 billion) for Jio, for a total total contribution of 33.5%.
The rally also totaled 10.9% overall in its sales subsidiary, Reliance Retail Ventures, to Silver Lake, KKR and other global private assets, as well as some sovereign wealth funds, for 472.7 billion rupees to total. And it successfully raised 531.2 billion rupees in equity through a rights issue for domestic stock investors.
All said that, by the end of this year, Reliance group will have written off its accumulated net debt, which had stood at nearly 2.6 trillion rupees at the end of March.
In recent years Reliance Industries, which has become one of the major markets in India, due to its success in the petrochemical industry, is expanding into the digital and retail sectors. © Reuters
When Ambani was invited to a fireside conversation with Mark Zuckerberg for an online event on Facebook on Dec. 15, he spent a long time praising Facebook CEO’s decision to invest and partner with Reliance. “I have no doubt going forward that it was your investment that put the ball forward,” said Ambani, referring to Reliance’s fundraising campaign. “Yours sincerely, we at Reliance and Jio greatly appreciates our partnership with Facebook, ”said Ambani rhapsodized.
But Ambani may have less peace of mind than his ideas indicate. He is facing growing concerns about his links to Facebook as the social media giant tackles a major trust suit filed by the U.S. Federal Trade Commission and several state governments – part of global backlash against tech giants market dominance and what critics see as anti-competitive practices.
The FTC suit marks the exploits of Facebook of Instagram in 2012 and WhatsApp in 2014 as illegal anti-competitive acts, saying the two should be separated from Facebook.
The outcome of the public debate and the lawsuit has two implications for the business of Reliance. One is its impact on the Reliance-Facebook alliance itself, and the other is its impact on the group’s building strategy, which has already drawn criticism against competition. .
The Reliance-Facebook partnership aims to build a new e-commerce platform called JioMart to challenge the current Indian e-commerce leaders, Walmart-owned Flipkart and Amazon.com . And the key to that collaboration is to give JioMart access to the 340 million users of WhatsApp. If U.S. courts rule that Facebook must turn off the instant messaging service, the foundation of the partnership will crumble.
Also, given that WhatsApp has a de facto monopoly in the Indian messaging app market, the Reliance-Facebook alliance could be seen as an effort to strengthen market leadership in telecommunication and mobile messaging services.
In fact, Facebook set up a new entity in March that became a direct party to the deal to acquire a 9.99% stake in Jio Platform, apparently to avoid any difficulties in the regulatory consent process. In June, the Competition Commission of India approved the entity’s investment in Jio, as it is not “involved in any business in India.” But public perceptions of the deal could change .
The other risk may be quicker: A growing number of legal experts and industry commentators are raising concerns about Reliance’s leadership in sales. Trust has received more than 25 purchases over the past three years. And armed with the strongest balance ever, it is believed to be close to buying up. So far what he has found so far has focused heavily on the e-commerce industry, for example he recently acquired it in August from Netmeds, one of the leading online drug stores in India.
Complaints about Reliance’s intentions grew after the company, which is already India’s largest sales agency, announced in August that it had agreed to the key sales and logistics businesses of Future Group, India’s pioneer buy the modern and No. 2 reseller.
The agreement was particularly controversial as Future is in partnership with Reliance’s largest e-commerce competitor, Amazon, and is a reminder of Facebook’s ingenuity to eliminate -competitors by purchasing them. Amazon struck back in Singapore’s arbitration court, saying Future violates Amazon’s contractual rights. He is seeking a restraining order to suspend the Reliance-Future contract. A Singapore court issued an initial decision suspending the purchase.
In India, although the competition authority scrapped Reliance-Future contract in November, the Delhi High Court on December 21 rejected Future’s petition to prevent Amazon from asking market regulators to block it. Reliance. As Reliance’s construction spree has accumulated momentum, there is a growing loss to reevaluate the effectiveness of competition commissions, antimonopoly rules and enforcement practices in India.
Data analysis consultant Arjun Srinivas wrote in September in the English-language newspaper Mint that the monopoly problem is on the rise in India, citing his research showing 50 businesses where one company control 70% or more of sales.
Vijay Shekhar Sharma, founder and chief executive of Paytm’s digital payment app, and the founders of more than 100 start-ups in October who strongly criticize Google’s alleged abuse of its market leadership in their mobile operating systems, lobbying for stricter rules against trust. Calls for stricter implementation of antimonopoly regulations, both in India and globally, could intensify in the coming months.
Market commitment to trust has cooled slightly after the stock hit a high of 2368.80 rupees on September 16, which represented a market capitalization of around $ 218 billion and made Reliance one of the 40 most valuable companies in the world, from that date. , according to QUICK-FactSet data.
The stock price and market value of the company on December 18 have fallen 16% since hitting a peak. Reliance’s market cap was at $ 166.4 billion as of December 23, placing it at No. 58 worldwide.
Jal Irani, an analyst at Edelweiss Securities, described the Reliance price range in September as a “FAANG-like” valuation, which was “depreciated for a company 70% of its enterprise value including businesses mature oil, gas, petrochemical and telecom. “FAANG is an acronym for the five internet-related giants Facebook, Apple, Amazon, Netflix and Google. Looking at the recent decline in shares, Irani said that “excessive investor eviction is declining.”
The market may feel clouds hanging over the growth scenario Ambani has presented: that its already large conglomerate will be able to grow even faster by get full partnerships with technical giants whose legal battles have begun.