Mukesh Ambani May Unveil Reliance Expansion, End Feud With Anil

June 18 (Bloomberg) -- Billionaire Mukesh Ambani may unveil plans to invest in power and communications in India amid speculation that Asia’s richest man is also likely to formally end a five-year-old feud with his younger brother.

Anil Ambani may attend the annual shareholder meeting of Reliance Industries Ltd., controlled by Mukesh, for the first time since the world’s wealthiest brothers split the empire founded by their father, the Hindustan Times reported yesterday, citing an unidentified person close to the family.

The shareholder meeting takes place in Mumbai today, exactly five years to the day the Ambanis split India’s second- biggest group and squabbled as their business interests clashed. Indian newspapers have speculated about a rapprochement since the brothers scrapped a non-competition accord last month, removing curbs on investments by their companies.

A reconciliation would be “a positive signal for all shareholders,” said Walter Rossini, who helps manage about $1.2 billion of emerging market stocks, including Reliance Industries shares, at Aletti Gestielle Sgr Spa in Milan. “They realize that together they are much more effective and can grab a much larger share of the cake,” he said by telephone yesterday.

Last week the brothers and their families holidayed in South Africa’s Kruger National Park, where Mukesh and Anil discussed ways to develop synergies between their businesses, Press Trust of India reported June 13, citing unidentified persons familiar with the details.

Manoj Warrier, a spokesman for Reliance Industries, declined to comment on the reports and Anil Ambani didn’t respond to an e-mail seeking comments.

Accord Scrapped

Reliance, which accounts for about 14 percent of the benchmark stock index, rose 1.3 percent to 1,071.40 rupees in Mumbai yesterday. The stock has lagged behind the Sensex in four of the 10 years ended June 15, according to Bloomberg data.

Reliance on June 11, less than a month after the accord between the brothers was scrapped, acquired an Internet services company for $1 billion. Anil’s Reliance Communications Ltd. said it dropped out of the bidding for Internet services permits after securing third-generation mobile-phone licenses in an earlier auction.

Fund manager Deven Choksey, chief executive officer of Mumbai-based KR Choksey Shares & Securities, said more initiatives may be outlined by Mukesh in his annual speech to shareholders today.

Under an agreement reached on June 18, 2005, Mukesh, 53, kept the petrochemicals, oil and gas units and Anil, 51, got the power, telecommunications, financial services and entertainment units.

‘Two Giants’

The removal of the non-competition pact may translate into “these two giants effectively beginning to collaborate,” said Rajeev Kohli, professor of marketing at Columbia Business School in New York. “Given the needs of the country at present, there is a great opportunity if it’s in the right sectors of the economy,” such as infrastructure development or energy, he said by telephone.

The Mumbai-based company’s first foray in commercial electricity generation may come as early as next month when Reliance plans to bid in a government auction to build at least one power plant in India, two company officials said on June 16.

The operator of the world’s biggest refining complex and India’s largest natural gas field had outstanding debt of about 625 billion rupees ($13.4 billion) and cash and equivalents of 218.7 billion rupees as of March 31, the company said in April. Reliance is in talks with banks to borrow $1 billion, two people with direct knowledge of the matter said June 4.

Even as Mukesh Ambani diversifies his business, investors expect Reliance to continue to buy oil and gas assets overseas and fulfill its ambition of becoming a global energy company.

Acquisitions

The company bought shale gas assets in the U.S. from Atlas Energy Inc. for $1.7 billion in April after failing to purchase LyondellBasell Industries AF in a deal that would have valued the bankrupt chemicals maker at $14.5 billion, and losing a bid for oil sands assets in Canada owned by Value Creations Inc.

Reliance is considering buying a stake in shale gas assets owned by Pioneer Natural Resources Co. in the U.S., two people with knowledge of the matter said June 10.

“They can become a significant global player and there is nothing to hold them back,” said Seth Freeman, chief executive officer at San Francisco-based EM Capital Management LLC, which owns Reliance shares. “They have the financial wherewithal to do that and energy would be the way they expand overseas.”