Ambani: India’s richest man with a penchant for Kenya’s big oil money and property deals

It was Warren Buffet, an American investor, business magnate and philanthropist who said that the secret of becoming rich is becoming careful when others are greedy and being greedy when others are careful.

For Mukesh Ambani, the richest man in India and a business tycoon with shares in diverse sectors including Reliance Industries Limited (RIL), this cannot be far from truth. As the Managing Director and largest shareholder of RIL, a Fortune Global 500 company and India’s second-most valuable company, he knows too well when to cast his investment net.

And when he cast his net a decade ago, he roped in Kenya. Buying, developing and selling at a profit has been his language of business. One would easily mistake his second name for a Kenyan from western region, but the Ambani here is 5,013 kilometers away.

Where big deals and huge sums of money are involved, his name features too. For him, it is not one time deal, he loves repeat deals.

Last week, Competition Authority of Kenya gave nod to the local unit of French oil firm, Total to acquire Gulf African Petroleum Corporation (Gapco). On the surface, it is just a deal between two oil companies, but the shareholding details bring in Mr Ambani in a deal that is estimated at $400 million (Sh41.4 billion).

In 2007, it was Ambani’s RIL, which through its wholly owned subsidiary, Reliance Industries Middle East DMCC that acquired 76 per cent stake in the Mauritius-headquartered oil firm. Import of petroleum products in East and Central Africa, Ambani-owned firm had said, was expected to rise and therefore the need to ride on RIL’s strategic location from India to do business in the region.

Largest Greenfield refinery

Hardly, a decade later, the subsidiary is relinquishing its entire stake in a company that has been dominating the oil import business that feeds majority of East and Central Africa oil marketing companies with stock. But as data would show, East African region has been experiencing increased demand for petroleum products mainly driven by heavy infrastructural activities being undertaken by respective governments.

The subsidiary has been a big deal in the region since it owns and operates storage terminals in Tanzania, Kenya and Uganda and has other well spread depots in East and Central Africa.

In addition, it runs over 250 outlets covering retail and industrial segments. But to cap it all, it has been backed up by the parent company -- RIL-- which owns and operates the world’s largest Greenfield refinery, Jamnagar, on the west coast of India. This helps it export oil to more than 100 countries around the world relying on crude processing capacity of 1.24 million barrels per stream day. This, Ambani knew it all by the time he chose to cast his net in the region.

As he cashes in on part of the billions from the deal, something big is happening in India -- and his name is included too. From scratch, he has used $20 billion (Sh2.1 trillion, an equivalent of 91 per cent of the budget that is sustaining Kenya in current financial year) to build Reliance Jio Infocomm, a national digital empire stretching from phones and hardware to home entertainment and custom-made Apps.

While announcing the grand shift to digital empire after making a name in oil business, the mogul who will be turning 60 years on April 19 said: “For Reliance... data is the new oil, and intelligent data is the new petrol.” And already, other players -- Bharti Airtel, Vodafone and Idea- - are feeling his presence especially with three months free calls and free data offer that ends in March.

Back to his business ventures in Kenya. He loves to sell but only if that means making money. Gapco has been ruling the oil import tenders called Open Tendering System. And in real estate, Ambani’s name is well featured too. Through Delta Corporation East Africa, where Ambani’s RIL owns 60 per cent stake, making money and more money has been its business in the real estate space.

Mr Ambani has been in headlines for acquiring prime plots within Nairobi, developing them and either selling or renting out to both local and international organisations. All these at a profit.

When he sold the multi-storied Delta Centre in Nairobi’s Upper Hill to the World Bank, it was reported that the firm made $22.8 million (Sh2.4 billion using current exchange rate). The deal was completed around 2011, just four years after the company became operational.

The firm went ahead to sell Delta Corner, a 21-storey twin-tower building located in Westlands. This time, the buyers -- University of Nairobi Pension Scheme and financial consultancy firm PricewaterhouseCoopers had to part with Sh4 billion. In yet another high-valued deal, Delta Riverside, a gated complex fit for small and medium size companies was sold off at undisclosed amount -- but not at a loss when Mr Ambani is involved!

It also constructed Delta Plains, a residential complex targeting middle income and low income class at Athi River, which is estimated to have fetched Mr Ambani’s companies Sh548.8 million.

When it said in 2007 that it had come to quench Nairobi’s thirst for office space, no one knew it will take the real estate sector by storm. In 2014, when it announced plans to exit its real estate to venture into gaming and hospitality, Mr Ambani knew too well it was prime time to set another challenge.

Gaming and hospitality

In an interview with Chinese business news outlet, CNBC, chief finance officer for Delta Corporation, Hardik Dhebar, said that that success was out for everybody to see. “We have done exceedingly well in Kenya and we almost doubled our money. We had invested 70 crore (Sh1.16 billion using current exchange rate) in 2007 and total inflow from Kenya is in the region of 140 to 145 crore (Sh2.3 billion to Sh2.4 billion using current exchange rate),” Mr Dhebar told CNBC.

In gaming and hospitality — the next big move — will be easy landing given that Delta Corporation that has 39.2 per cent stake in Delta Corporation East Africa, is India’s largest and only publicly traded gaming and hospitality company.

Mr Ambani has seen the next move. It must be big and huge amount of money must feature. After all, he says he loves to think big, fast and ahead. “Today, I see a billion people as a billion potential consumers, an opportunity to generate value for them and to make a return for myself,” goes one of his many business philosophies.