Mukesh Ambani has joined the league of world’s richest with the help of a simple formula: assembling admirers for Rs 150 businesses. First he got Facebook Inc. and Google to back his fledgling digital ambitions, and now he may be trying to entice Amazon.com Inc. into his retail venture, already India’s largest.
In four years, the Indian billionaire has amassed roughly 400 million customers for his mobile data business. What does Ambani eke out from each of them? Less than Rs 150 a month. The chump change didn’t deter Facebook and Google’s parent, Alphabet Inc. Together with marquee private equity investors and sovereign wealth funds, Silicon Valley tech titans made a beeline recently to invest in Ambani’s Jio Platforms Ltd., valuing it at about $65 billion.
That $20 billion fund-raising spree has already met the refining and petrochemicals czar’s goal of making his flagship Reliance Industries Ltd. net-debt-free, giving it enviable financial strength just as the coronavirus pandemic is taking a toll on most other balance sheets. The tycoon wants a repeat performance for another Rs 150 business in his stable: retail.
He has offered a 40% stake in Reliance Retail Ventures Ltd. to Amazon, Bloomberg News reported Thursday. It’s unclear if Jeff Bezos will bite. But others have. Menlo Park, California-based Silver Lake Partners, which bought a stake in Jio, has written a $1 billion check for 1.75%. Another Jio investor, KKR & Co., is also probably coming on board.
To see how the excitement is rising once again over a princely Rs 150, consider Reliance’s 30 million square feet of retail space. Each square foot, analysts expect, will garner $2 a day by 2022. On an operating margin of 7%, that translates to $1.5 billion in earnings before interest, taxes, depreciation and amortization. All Ambani had to do was to convince Silver Lake that this Ebitda is worth 38 times today. And with that, he unlocked the gates to a $57 billion enterprise.
If the Facebook deal for Jio is any guide, Amazon as a strategic partner might get its 40% for a small discount to what Silver Lake paid, though the reported $20 billion price tag is still formidable. Excluding his $38 billion divorce settlement, Bezos hasn’t done a transaction as large as this. There’s another wrinkle. Amazon India, in which he has already committed billions of dollars, competes with Reliance Retail’s physical stores — as well as with Ambani’s version of “phy-gital” retail.
But on his own, Bezos must fight with one hand tied behind his back. Foreign-owned e-commerce sites, such as his or Walmart Inc.’s Flipkart, must operate as pure marketplaces for third-party sellers. The law against owning inventory has become stricter, with discounts triggering allegations of favoring connected parties. India’s competition commission received a fresh such complaint from a group of Amazon vendors recently. Being an Indian company, no such restrictions apply to Reliance’s grocery stores, supermarkets, or JioMart, Ambani’s vision of virtually connecting 30 million neighborhood shops with his telecom customers.
Although still untested, the latter is his edge. The bulk of the 20-fold growth that India’s online grocery sales might witness over the next five years may go to the Jio-Facebook partnership, Goldman Sachs Group Inc. estimates. The advantage for Ambani could also carry over to higher-margin items, the same way as Costco Wholesale Corp.’s popular $4.99 rotisserie chicken helps the American retailer sell a little more of everything from apparel to flat-screen TVs.
Covid-19 has been a shot in the arm for Reliance, despite retail Ebitda of only $145 million in the June quarter, a 47% drop from last year. The carnage from a nationwide lockdown allowed it to swoop on debt-strapped rival Future Group’s retail, wholesale, logistics and warehousing units, acquiring the lot for just $3.4 billion. More importantly, the prospect of getting stuck with sub-5% growth in the post-pandemic economy is making Prime Minister Narendra Modi’s government reliant on an increasingly small number of domestic groups to pull India out of its tight spot.
Unlike China, India’s billion-plus consumer market has been open to U.S. tech firms. But when Ambani requested Modi last year to end “data colonization” by global corporations, it became clear that a shift was coming. Any remaining doubts have been removed by the post-Covid surge of economic nationalism.
Where does that leave Silicon Valley and Wall Street? With U.S.-China relations deteriorating — most recently over the erosion of Hong Kong’s autonomy — both need an alternative. In a billion-plus consumer market, even a Rs 150 business holds the promise of future riches, and Reliance is demonstrating that it has more than one such opportunity. To get into bed with Facebook, Google, and possibly even Amazon at the same time takes some chutzpah, though. Chalk it up to Ambani’s dominance of the market. –Bloomberg
Also read: Mukesh Ambani and Jeff Bezos could become allies if this $20 billion deal goes through
What a bunch trash talk. Well what else to expect from news paper running agendas.
Bhikh maangne wali auwkat mein khud khda h print..aur baat Ambani ki karega. khudki auwkat dekhi h..do Kodi ki…aur yeh jo journalist h..chutzpa likhne wale…apne baap ko bhi yhi bulate honge..Liberlandu ki hmaesha hi jlti h..apni chaddi ki ched ginno baith k..dusri ki utarne se pehle
I REALLY DIDN’T KNOW THE MEANING OF CHUTUZPAH?
BUT AS A MEDIA OUTLET U SHOULD WRITE EASY WORD’S FOR UNDERSTAND LARGE NUMBER OF READERS.
N ALSO USING THE WORD’S GOING TO BED IS SOMETHING LOOKS IN BAD😧 TASTE SO AVOID USING THIS TYPE OF WORDS…
BUT I CONGRATS U FOR YOUR COURAGE FOR GOING AGAINST BIG FISH’S LIKE AMBANI…. N U R NOT IN THE LINE OF GODI MEDIA… EX– AJJ TAK – ZEE NEWS-NEWS 18 OF AMBANI…
THEY’RE JUST PUPPETS🐕🐕🐕 OF GOVERNMENT/ AMBANI.
Once a bhdwa always a bhdawa(the print).
I can suggest better term for “phy-tal” . I think writer wanted to combine physical store with digital online presence of Jio. How about Di-physi-tal
So print thinks that this ‘Chutzpah’ can make wealth of Ambani’s swoon beyond their imagination, while your so called self proclaimed ‘Top Quality’ reporting is still looking for donations !!
What does this chutzpah word means, is it chut-chopati 🤪
It is funny that most commentators have no idea what chutzpah means and seem to be confusing it with an Indian profanity that starts with he letter ‘c’. Since most of these commentators seem too lazy to google, let me oblige – chutzpah is a Hebrew origin word that webster defines as “supreme self confidence or audacity”…….it is hardly derogatory.
What a shitty writer. Cheap writing, disgusting journalist.
Theprint, It’s your loss because you hired a bad journalist to write articles like this, i have never seen such cheap language and words like “chu.. get into bed?” in an article. No idea what journalism means, your site earns money on ads and you lost a viewer like me and many because of this stup1d article. Not visiting this site again. No doubt they are called prestitutes.. Shameless, brainless, garbage people.
“To get into bed” really? Is that the analogy or the English phrase that was not taught to me in school. Behave Print, behave.
They really did used the word “chutzpah”.
At first I thought it might be something else.
Chutzpah? These are the words you use in your headlines? Is it Ambani’s mistake that he’s rich? Search for a better writer ThePrint.
what’s this show of courtesy as respect as the first phrase used – “to get into bed” doesn’t this creep u guys. it becomes a shame as a human.
What kind of cheap language is being used in ur article even if it’s for sake of expression only.
Is this journalism all about for you ?????
Name sakindra kumar village parsad post pakhanah sri ram police station minapur district muzffaarpur pin code 843109
I have a lot of chutzpah because I use Facebook, Google and Amazon everyday
Dude …do I think, if you would have been able to understand these business and economic fine print, life would have made you a journalist…in that case u would have landed either a respectable job or a post or any other decent job rather than becoming what u are today…
What a shitty writing.!
You are a proper example of Low life bootlicker
The print should be renamed as the jealous and congress lickers. See the language you have used. You guys are such a losers.
From a news agency such indecent language is unacceptable.
What is the meaning of this word “chutzpah” ??
Is “chutzpah” really a good word to use it here ?
You are a media outlet, don’t know what let you write this. Is it to grab attention. That can be done by producing good content,which by the way already you are doing. Consider this a feedback, avoid such derogatory words.
Super idea if it suceeds, reliance and india will be on the world map. Keep it up mr mukeshji.
Kudos to you for framing first lines in such a decent way. May God always keeps you in crisis.
why you always give bullshit news… learn from zee news, times of india and Aajtak… your news sometimes seems like anti India or might be leftist… which are read by only 0.0001% of the Indian population… praying to god to close this nonsense in the name of journalism
“to get into bed” what kind of professionalism is this?
Shame on writer. Does he even know what he is writing? Does this st#pid even know what Mukesh role is in bringing economy and jobs?
Take over Amazon completely and don’t sell them any Reliance Business.
Lowest form of journalism. If this is the language allowed to be used then the people are abusing journalist in public are right too. Such a shame!
Billion dollar cheque and not check
Zaban sambhal ke headline likha kar. Khud ki tarakki to “The print” valo ke aukaat ke bahar ki baat hai, dusro ki dekhi nai jaati
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