Mukesh Ambani, chairman and managing director of Reliance Industries Limited (RIL), is on his way to becoming the richest Indian in the world, overtaking Lakshmi Niwas Mittal, CEO and MD of Arcelor Mittal.
After the proposed preferential issue of equity shares to promoters on Saturday, Ambani will control 54.8 per cent of the equity holding in RIL, India’s largest private sector company. In the sweepstakes to decide who is the richest of them all, increasingly, the market value of the shares controlled by a person or family is the determinant of their wealth.
The RIL board has decided to allot 12 crore warrants to promoters, led by Mukesh Ambani, which will be converted into equity shares in the next 18 months at around Rs 1,400 per share.
After the conversion, Ambani’s wealth in the company, at RIL’s current price of Rs 1,407 per share, will be around $23.12 billion (Rs 104,040 crore) against the current value of Mittal’s equity stake of around $21.44 billion (Rs 96,480 crore) in Arcelor Mittal. Though Mittal’s business mainly spans the globe with few interests in India, he remains an Indian passport holder, whose wealth is right now ahead of Ambani’s.
However, after the preferential issues, Ambani will have control over 54.8 per cent equity stakes of RIL. Since the Petroleum Trust and associate companies of RIL own 12.6 per cent, Ambani’s direct holding in the company will be 42.2 per cent. However, in a complex maze of calculations, Ambani will have control over 42.2 per cent of the 12.6 per cent stakes held by the trust and associate companies. This is equal to 5.6 per cent of RIL stakes. This, in effect, means Ambani’s direct ownership in RIL is nearly 48 per cent.
The paid-up capital of RIL after the preferential issues will increase to Rs 1,513 crore, comprising 151.3 crore equity shares of Rs 10 each. Its market capitalisation, at the current market price, would be Rs 212,879 crore. A 48 per cent stake in this would equal $23.12 billion at current exchange rates.