Mukesh Ambani, Asia’s richest man, has launched India’s largest-ever share sale, a move that underscores the country’s growing financial clout but also exposes the fissures in global capital flows. The Reliance Industries subsidiary, Reliance Retail Ventures, is seeking to raise up to Rs 150 billion ($1.8 billion) through a rights issue, a record for a domestic equity offering. For London, where the City’s bankers are eyeing the transaction with a mix of envy and opportunism, it is a reminder of the shifting axis of global finance.
The deal comes at a pivotal moment. Indian equities have been on a tear, with the Nifty 50 index up 12% in the past year, buoyed by retail investor euphoria and a government keen to project economic strength. But beneath the surface, there are signs of froth. The price-to-earnings ratio of the Indian market is now above 22, well ahead of its 10-year average. Ambani’s timing is impeccable, a classic case of selling when the sun is shining.
Reliance Retail, the jewel in the Reliance crown, is a curious beast. It is India’s largest retailer by far, with over 18,000 stores, yet its profitability remains patchy. The capital raised will be used to expand aggressively into quick commerce and to pay down debt. The issue is priced at a discount to the market price, a sweetener for wary investors. This is a family affair: Ambani’s children will participate, and the Reliance Group itself will underwrite a portion.
London’s interest is not purely academic. The UK has been courting Indian companies for years, offering a ‘fintech bridge’ and a favourable listing regime. But the reality is that Indian giants prefer Mumbai. When Reliance tried to list its telecom arm in London via a spin-off, the plan was shelved. The City remains a hub for bond issuance, but equity capital markets have been anaemic. Ambani’s cash pile could be used to snap up distressed UK assets, as Ambani has done with Stoke Park and a stake in British luxury.
The broader context is the capital flight from emerging markets. Since the pandemic, India has been a rare bright spot, attracting $20 billion in foreign portfolio equity inflows in 2023. But with interest rates elevated in the West, especially in the US, the carry trade is fraying. A hawkish Federal Reserve could trigger a reversal. Ambani’s share sale is a hedge: raise money now before the liquidity tide turns.
For the Indian government, which is in election mode, the success of the offering is critical. A record undersubscription would be a blow to the narrative of ‘India rising.’ But the retail investor base is hooked on crypto-like returns, and Ambani is their favourite son. The issue is likely to be many times oversubscribed, but the long-term arbitrage is worrying: Indian households are piling into equities, neglecting fixed income. The bond market, which should reflect the country’s risk, remains stunted.
The gold standard for such a share sale is the 2008 rights issue by Reliance itself, which was oversubscribed 11 times. That was at the peak of the last bull market. Today, the backdrop is different. Inflation is sticky, the central bank is reluctant to cut rates, and the rupee is under pressure. Ambani’s empire is leveraged, with net debt of around $20 billion. The share sale will help, but it is a drop in the ocean.
London’s opportunity lies not in hosting the listing but in the knock-on effects. The proceeds could be used for acquisitions in cash-strapped UK retail. Or the bonds issued by Reliance Retail could be floated in London, giving gilt investors a yield fix. The Bank of England’s quantitative tightening has left the market hungry for corporate paper. But the risk is that Indian companies become addicted to foreign capital, and when the music stops, the exits will be crowded.
In the end, Ambani’s share sale is a classic case of financial hubris versus necessity. It is a bet that India’s growth story is durable enough to absorb a torrent of new equity. For London, it is a reminder that the City’s role is to finance the empire, even if the empire is no longer British. The bottom line: watch the subscription numbers carefully. If they are weak, it will be a canary in the coal mine for global risk appetite.
