Mukesh Ambani loses the richest label in Asia to Jack Ma on the $ 5.8 billion route
The defeat, exacerbated by growing fears that the spread of the new coronavirus will push the world into a recession, erased $ 5.8 billion of Ambani’s net worth on Monday and pushed it to number 2 on the list of the richest people from Asia, according to Bloomberg. Billionaires Index. Ma, the founder of Alibaba Group Holding Ltd. who relinquished the No. 1 ranking in mid-2018, returns to the top with a fortune of $ 44.5 billion, roughly $ 2.6 billion more than Ambani.
Oil collapsed more in 29 years on Monday when Saudi Arabia and Russia promised to pump more in a fight for market share. The drop occurs just as the coronavirus is fueling the first decline in demand in more than a decade. That raises questions about whether Reliance Industries Ltd, Ambani’s flagship, will be able to reduce the net debt to zero in early 2021, as promised. The plan depends on a proposal to sell a stake in the group’s petroleum and petrochemicals division to Saudi Arabian Oil Co, the world’s largest crude oil producer.
While the coronavirus has reduced some of the companies of the technology giant Alibaba, the damage has been mitigated by an increased demand for its cloud computing and mobile applications.
In comparison, Reliance Industries does not have that positive side. Shares in the Indian conglomerate fell 12% on Monday, the most since 2009, extending this year’s decline to 26%. Alibaba’s US depositary receipts have fallen 6.8% so far in 2020.
Few of the world’s billionaires did well on Monday’s collapse, as the S&P 500 index and the Dow Jones industrial average fell more than 7.5%, the most since the 2008 financial crisis, threatening to end to the longest bull market in history. But no one was worse than those whose fortunes are based on oil. Wildcatter’s fortune Harold Hamm was almost halved to $ 2.4 billion and oil tycoon Jeff Hildebrand lost $ 3 billion, surpassing both in the Bloomberg 500-member wealth ranking.
In a shift towards new businesses such as telecommunications, technology and retail, Ambani’s Reliance Industries has accumulated billions of dollars of debt over the years.
He spent almost $ 50 billion, most of them financed by loans, to build Reliance Jio Infocomm Ltd, which became India’s number 1 wireless service provider within three years after its debut. As the mobile company took off, Ambani also revealed plans for an e-commerce empire that rivaled Amazon.com Inc in India.
In addressing concerns about liabilities, Ambani pledged in August to reduce the group’s net debt to zero from around $ 21 billion as of last March. The Aramco deal is crucial to that plan for which Reliance Industries has valued its oil-to-chemicals division at $ 75 billion, including debt, implying a valuation of $ 15 billion for the 20% stake that It is on sale.
Signs of a possible delay in that agreement baffled some investors, which hurt the shares as it reached a record high on December 19.
Reliance Industries expected the Aramco transaction to be completed in March, but people familiar with the matter said in February that the talks were still ongoing to bridge the differences between the two sides on the structure of the agreement.
In addition to the uncertainty, the administration of Indian Prime Minister Narendra Modi asked a court to stop the sale of the proposed stake, threatening a key source of funds needed to reduce net debt.
But Ambani, 62, may soon recover from the reverse, said Harish HV, managing partner of ECube Investment Advisors in Bangalore, India.
“The game is not over,” he said. “Ambani has successfully built a robust business model that would keep him in the game. In addition, its telecommunications business will begin to produce results in the coming years. ”