Billionaires: Mukesh Ambani goes on a shopping spree to expand Indian retail footprint

In our fortnightly roundup, Asia’s richest man looks to acquire several online retailers in a race against Amazon, while George Soros’ investment in credit ETFs pays off

Mukesh Ambani, Asia's richest man, is seeking to strengthen his grip on India's retail a market. Bloomberg

Mukesh Ambani

Mukesh Ambani, Asia’s richest man who spent the first few months of the pandemic raising more than $20 billion (Dh73.5bn) by selling stakes in his technology venture, is now on a shopping spree.

The Indian billionaire is looking to acquire several local online retailers to help expand product offerings, sources said, as he races to build his e-commerce platform and compete against Amazon.

Reliance Industries, Mr Ambani’s oil, retail and telecommunications conglomerate, is in various stages of negotiations to either buy out or purchase stakes in Urban Ladder, an online furniture seller, Zivame, a lingerie maker, and Netmeds, which delivers medicine, the sources said.

The 63-year-old tycoon is seeking to widen his retail footprint in a market that’s become a hot spot for global giants such as Amazon as well as many local rivals, all chasing a billion-plus consumers.

The business mogul last month outlined plans to rope in investors for  Reliance Retail, days after selling a combined 33 per cent stake in digital services holding company Jio Platforms to partners including Facebook and Google.

Reliance could pay $160 million for Zivame, the Economic Times reported. The Urban Ladder deal could be pegged at about $30m, while Netmeds at $120m, local media have reported. Milkbasket, a milk delivery company, is also one of the targets, the Times of India reported.

Mr Ambani’s latest hunt for deals follows a wave of similar acquisitions that started in 2017. Since then, his group has purchased British toy store chain Hamleys, a local music streaming app called Saavn, logistics operation Grab a Grub Services and the Haptik artificial intelligence chatbot. Reliance is also closing in on a deal for stakes in some units of Indian retailer Future Group, sources said in June.

Late last year, Mr Ambani unveiled his shopping portal JioMart, which is now delivering to about 200 cities and towns.

The talks are part of the intensifying war to win over Indian consumers – both online and in physical stores. Amazon has pledged to invest $5.5bn in the country, while Walmart spent $16bn to buy local e-commerce leader Flipkart Online Services in 2018.

George Soros

While hedge funds largely rejected the age-old adage “don’t fight the Federal Reserve” in the second quarter, there were a few notable exceptions.

Soros Fund Management, the family office of billionaire investor George Soros, boosted its holdings of BlackRock’s iShares iBoxx $ Investment Grade Corporate Bond exchange-traded fund, ticker LQD, by $161m in the period, regulatory filings as of June 30 show. That was the biggest bet among $534m of fast-money inflows, with Moore Capital’s $109m investment ranking second.

Still, the majority of fund managers pulled money from LQD even after the Fed announced in late March that it would purchase corporate bonds and eligible ETFs. Trading effectively froze across bond markets during the height of March’s coronavirus-fuelled turmoil, but the Fed’s backstop sparked a torrid rally that sent billions into corporate bond ETFs.

Despite the surge, hedge funds yanked $1.87bn from LQD – the largest credit ETF – with Elliott Investment Management’s $468m exit and Ken Griffin’s Citadel’s $341m reduction leading the outflows.

For Soros and other funds that piled in, the investment has paid off: LQD has climbed nearly 20 per cent since the Fed announced its support on March 23. The central bank has purchased $8.7bn worth of ETFs through July 31 after starting the facility in mid-May, according to its latest disclosures, and is now the second-largest holder in the $56bn LQD.

Anil Agarwal

Billionaire Anil Agarwal’s Vedanta Resources is marketing a dollar bond in a crucial test of investor appetite for Indian junk debt.

The commodities giant is offering a three-year amortisation note with an initial price guidance of about 13.25 per cent, according to a source.

The fundraising is critical for Vedanta Resources, whose plans to delist its Indian unit Vedanta Ltd still face hurdles including getting stock exchange approvals. The proceeds of the offering will be used to partially fund the privatisation. Any surplus money will go towards a tender offer of Vedanta Resources 2021 dollar bonds or repayment of the securities at maturity, the source said.

S&P Global Ratings said that if the privatisation goes through, Vedanta Resources’ credit rating is set to be upgraded, and any failure would mean immediate downgrade pressure. Vedanta Resources also plans to fund the privatisation with a loan.

According to a preliminary offering circular dated August 11, Vedanta Resources has received commitments from lenders for up to $1.75bn. That can be drawn through a three-month bridge facility or a bank guarantee and the terms are subject to change.

The commodity giant’s bonds have staged a stunning comeback since slumping to distressed levels in March and according to UBS Group, the securities have priced in a successful delisting of its unit. If completed, the privatisation will make Vedanta Resources’ organisational structure cleaner and give the company better access to cash.

Under the terms of the notes, the issuer is required to redeem the bonds if it decides not to complete the privatisation or stock exchange approval is not received by 45 days after the settlement day.

Yusaku Maezawa

Yusaku Maezawa, the Japanese billionaire who sold his online apparel company to Masayoshi Son and is preparing to ride around the moon on Elon Musk’s spacecraft, jumped back into the country’s business scene with a set of unlikely bets on brick-and-mortar clothing retailers.

In a set of filings, Mr Maezawa disclosed stakes making him the third-largest shareholder in fashion retailers United Arrows and Adastria. The holdings are worth a combined 7.6bn yen (Dh260.7m).

While the stock purchases were for investment purposes, Mr Maezawa may also “give advice or make proposals to management to improve enterprise value if needed, assuming a friendly relationship can be created with management”, the filings said.

Both companies sell their goods on Zozo, the fashion portal that Mr Maezawa sold to SoftBank Group unit Z Holdings last year. United Arrows and Adastria could both use the help of a deep-pocketed investor. Like many Japanese clothing retailers, their shares have been devastated by the coronavirus pandemic, which has kept shoppers at home.

United Arrows, which has around 360 stores in Japan, is projecting an operating loss of 5bn to 7bn yen this fiscal year, with shares down 57 per cent since the start of 2020. Shares in Adastria have declined 35 per cent.

While Mr Maezawa stepped down from managing Zozo after the Z Holdings takeover, he retains a 17.5 per cent stake that is the source of much of his wealth. Shares in Zozo are up 35 per cent this year as more Japanese consumers embraced online shopping for clothes during the pandemic.