India’s two billionaires and one green ambition

Mukesh Ambani’s rivals should be relieved, though perhaps not too much. The petrochemicals czar has just told shareholders that he’s undertaking his life’s “most challenging” mission by investing 750 billion rupees ($10 billion) in clean power and fuel over three years.
It doesn’t appear to be a big capital commitment from India’s most powerful businessman, certainly not when he’s just raised $44 billion of capital during a pandemic, and made the $180 billion balance sheet of his flagship Reliance Industries Ltd free of net debt.
But these are still early days for a decisive change in the energy mix of India’s largely coal-fuelled economy. Ambani’s plans could easily turn as aggressive as his 4G telecom venture, initially dismissed by naysayers as a me-too entry into a crowded field of a dozen players. In just five years, Ambani’s digital startup has acquired 420 million-plus subscribers, bankrupted several other operators and will soon launch one of the world’s cheapest smartphones in partnership with Alphabet Inc’s Google. If he displays a similar hunger in solar energy, other aspirants might have to rethink their strategies. Among them may be France’s TotalEnergies SE, which has picked up a 20% stake in Adani Green Energy Ltd and invested directly in some of the projects in the firm’s 25 gigawatt solar-energy portfolio, which has grown by 50 times in three years. Gautam Adani, who earlier this year took his spot behind Ambani as Asia’s second-richest man, wants to be the world’s largest renewable energy producer by 2030.
Will Ambani get in his way? Until now, the two billionaires, both hailing from Prime Minister Narendra Modi’s home state of Gujarat, have largely operated in their separate spheres. Ambani has leaned toward data-driven consumer businesses like retail and telecom, whereas Adani has focused on infrastructure and utilities. Clean energy would see them overlap. Although Ambani’s initial plans aren’t overly dominant — he wants to meet 100 gigawatts of Modi’s green energy target of 450 gigawatts by 2030 — that’s probably because he’s yet to scope the policy terrain.
After spending $90 billion over the past decade, Reliance Industries says it has the “capacity to catalyse” another $200 billion in investment over the next 10 years. From a renewed focus on gas exploration to e-commerce over WhatsApp, India’s largest business enterprise has many irons in the fire beyond clean energy. It also has deep pockets, and influential friends like Google and Facebook Inc Yasir Al-Rumayyan, the head of Saudi Arabian Oil Co, is joining the Reliance board. The goal, which is running behind schedule, is to have Aramco as a strategic partner in Reliance’s cash-spewing refinery on India’s west coast and reposition it at the center of a low-carbon oil-to-chemicals empire.
To support those initiatives, Reliance has $13 billion of annual earnings before interest, depreciation, tax and amortization. Its foreign-currency debt is rated BBB by Fitch Ratings, a notch higher than India’s government. Meanwhile, the listed entities in the Adani Group have a little more than $3.5 billion of annual Ebitda and combined net debt in excess of $19 billion.
After a spectacular surge over the past year, the smaller group’s share prices have wobbled recently amid concerns around some opaque foreign funds’ outsize exposure.

—Bloomberg