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The Ambani Family now the Richest Family in Asia with twice the wealth of the Second Richest Family in Asia, even as Mukesh Ambani starts Succession Planning to hand over the Reins of Reliance Industries to his three scions

Yes, the Ambanis are now the most affluent family in Asia with twice the wealth of the second richest family – the Kwok family of Hongkong and the fourth richest family in the world.

As per the Bloomberg Billionaire, the Ambani family is now the richest family in the region, with a total wealth of $76 billion.

Ambanis alone owns nearly 17% of the total of $463 billion fortune that the top 20 richest families in Asia own.

Ironically, the wealth index’s biggest jump happened during the Covid -19 pandemic, wherein Reliance Industries has been continuously hitting the headlines with its recent string of fundraising deals.

While the entire world came to a complete standstill, Mukesh Ambani has been busy with strategies to further his business empire from oil – telecom – to – retail.

One of the most prominent feathers in the cap was the deal with Facebook and Google. By selling a stake in Reliance Jio, he raised $20.2 billion from leading private equity players

However, this was just the beginning – Mukesh Ambani went on to another fundraising spree, this time for his retail business, Reliance Retail.

The company has raised close to Rs 47 crore by selling a 10.09% stake in Reliance Retail; this is the largest fundraising exercise seen in the retail space and was completed in record two months.

Mukesh Ambani has been taking this route to diversify from his traditional oil & gas business since the returns of such are shrinking, which led to a buying spree in the shares of Reliance Industries and Reliance shares climbed over 50 % this year before it witnessed some correction.

The rally in Reliance stocks further pushed Ambani’s wealth by over $16 billion this year and has created a vast gap in the wealth, almost twice, of the top 20 richest families in Asia.

What is at stake?

Undoubtedly Mukesh Ambani’s Reliance Industries is one of the most significant businesses in India.

He is also India’s richest and most – powerful – influential private citizen of the country.

The stakes are high, a conglomerate with almost $90 billion in revenues and close to 195,000 employees and a future that holds much potential, going by its business’s recent activities.

As the wealth and influence of the Ambanis have grown and so has the role in Asia’s economic and cultural life. 

Their wealth is often at display at weddings, celebrations, and parties; there is no stone left unturned and no expenses spared whether it is private bashes with Beyonce and Chris Martin performances for the guests or Holi celebrations; all in all, every person in the – whos- who list wants to be part of these exclusive and expensive parties or events. 

Reliance has always been a vertically integrated company with multiple business lines, ranging from textiles, energy to petrochemicals, retail, and telecom, all operating under a single banner. 

 While this gives it the enviable capacity to cross-subsidize operations across different business verticals, it also creates a complex organizational structure with substantial overlap.

Mukesh Ambani, since 2019, has been slowly changing this top-heavy hierarchy at RIL to advance governance in line with global standards.  

In Reliance’s new structure, different business verticals will be run like independent businesses. There will be no interdependencies between group companies for raising capital or debt servicing.  

Also, the Ambani family is consolidating its ownership in the company.

 

READ  Reliance gives another stroke by overtaking Exxon and secures 2nd position in the list of world's top energy companies
READ  Reliance Retail buys 96% stake in Urban Ladder for over Rs 182 crore

Amidst Covid -19, Mukesh Ambani does succession planning.

The move perhaps is the lesson learned after Dhirubhai Ambani, the founder of Reliance Industries, passed on; the family business was engulfed with the conflict between the two brothers – Mukesh and Anil Ambani regarding the division and who will head what.

And herein lies the critical lesson that Mukesh Ambani has learned the hard way about the need for prudent succession planning. Having seen power struggles, media trials, and frayed family ties with his brother Anil Ambani is probably the reason for this step.

As part of the process, it is being said that he is setting up a family council to implement collective structure governance for his conglomerate that spans over oil & gas, telecom, and Retail.

According to media reports, the family retreated to Lake Lucerne in the Swiss Alps with his wife and his three sons and their respective partners to come up with a new structure, whereby his immediate family – including his twins – Isha and Akash and his younger son Anant, who would be given equal representation to enable succession planning. 

Incidentally, the three who have studied in the top universities in the US have been taking active and an increasing responsibility within the family business.

With this farsighted move, it is reported that the patriarch has instituted a Reliance Family Council that will play a crucial role in devolving power to the next generation when the time comes.

According to media reports, 63-year-old Mukesh Ambani, who has probably another ten years of direct governance of his conglomerate, wants to complete the succession planning process before the end of 2021.

If any, the council will address conflicts arising out of the succession plan and ensure a smooth transition. The move is undoubted to avoid any possible conflict between Mukesh Ambani’s three children relating to succession planning.

The family council will be following other multi-generational business families with interest in diversified businesses. It will serve as an executive body and will coordinate among the family members on different matters.

The three scions of Mukesh Ambani could end up getting control of the three main verticles each- retail, digital, and energy while maintaining synergy among themselves.

At present, the three Ambani siblings hold separate roles within RIL. 

Both Akash and Isha are serving as directors on Reliance Jio and Reliance Retail board since October 2014. 

Ambani’s youngest scion Anant was recently appointed as an additional director to the Jio Platforms board. Isha also helps her mother in running Reliance Foundation, the group’s CSR arm.

 

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