Mukesh Ambani’s Reliance Industries has launched India’s largest-ever share sale, a £4.5bn rights issue that has London traders scrambling to reposition. The move, which opens the door for global investors to buy into the conglomerate’s digital and energy arms, raises uncomfortable questions for the Square Mile: as Indian markets swell, British portfolios risk becoming parochial.
For decades, the City of London has been the undisputed hub for emerging market capital. But Ambani’s deal, orchestrated through a London-based depository receipt structure, signals a shift. The rights issue is fully underwritten by a syndicate of 10 banks, including Barclays and HSBC, but the sheer scale of the offering – equivalent to 10% of Reliance’s market cap – could funnel billions away from more traditional destinations.
This is not just about hot money. The Ambani family has courted sovereign wealth funds from the Gulf and pension funds from Canada. British workers, through their pension managers, now face a choice: chase the 7-8% dividend yields Reliance promises, or stick with sluggish UK equities. The average Brit’s retirement pot has already been battered by inflation and low economic growth. Fund managers, under pressure to deliver returns, will find Ambani’s offer tempting.
But there are risks. Reliance’s debt-to-equity ratio, while improving, still hovers around 0.7. The oil-to-telecoms giant is betting billions on a green energy transition that may take years to materialise. And India’s corporate governance standards, though tightening, remain a source of concern for prudential investors. The Serious Fraud Office in London has no jurisdiction over Mumbai.
For the working class in the North of England, this deal may feel distant. But the trickle-down effects could tighten belts further. As capital flows east, the Bank of England may find it harder to keep home interest rates low. And if Ambani’s share sale signals a broader trend, the London Stock Exchange could see its dominance challenged. Already, the LSE has lost its crown as Europe’s largest bourse to Euronext. This rights issue adds to the sense that the centre of gravity in global finance is moving.
The real question is whether ordinary savers will benefit. Reliance’s shares have outperformed the FTSE 100 over the past decade, but retail investors in India have often been sidelined. And with the rupee volatile, British-based buyers face currency risk. The Ambani family, meanwhile, stands to gain billions – critics say this is less about democratising ownership than locking in wealthy backers.
For now, the London Stock Exchange braces for a tidal wave of Indian paper. But if Ambani’s gambit succeeds, we may look back on this as the moment British savers started looking eastward. And that could reshape the very foundations of our economy.
