Diwali, the Hindu equivalent of Christmas, is traditionally a time when families come together. Yet, for India’s Ambani brothers—between whom the multi-billion Reliance Group empire was acrimoniously split two years ago—next week’s celebrations are unlikely to be warm. Despite being two of the richest men in the world, the twists of the continuing feud between Anil and elder sibling Mukesh remain worthy of a Bollywood series.
Anil Ambani’s planned flotation of Reliance Power Ltd is the focus of the latest spat. If successful, Reliance Power’s $3 billion (Rs11,790 crore) capital raising would be India’s largest initial public offering. Hiving off the power unit appears to be part of a wider plan to reorganize Reliance Energy Ltd into three separate businesses, including real estate and infrastructure, to get a full sum-of-the-parts value.
In true Bollywood style, things aren’t going smoothly. Anil is understood to have filed a complaint with the Indian regulator accusing his brother’s company, the larger Reliance Industries Ltd, of trying to stall the float.
The flotation of Reliance Power, which is still awaiting approval, has been dogged by a smear campaign alleging that Reliance Energy illegally transferred assets to the new power unit without shareholder approval. Anil claims the motive for the smear, denied by Reliance Industries, is the rising value of his overall holding group.
Since the demerger of the Reliance empire in early 2006, the value of the respective Ambani companies has soared. Mukesh has led the field, with Reliance Industries delivering a 262% total return, against Anil’s Reliance Energy’s 186%. But, after a poor 2006, Anil has been racing to catch up. Since the start of 2007, a boom in Indian utilities has resulted in Reliance Energy outperforming Reliance Industries by 110 percentage points.
Indeed, if Anil’s fortunes continue at their current pace and the much-hyped Reliance Power offering goes ahead, it might not be long before the Ambani brothers face a re-rating. Anil, with an estimated fortune of $18 billion and ranked 18th in Forbes’ billionaire lists, is only $2 billion behind 14th-ranked Mukesh.