India's Anil Ambani Says $25 Billion Available to Tap Growth
India, July 3 -- Anil Ambani, India's second-richest man, said he could raise 1 trillion rupees ($25 billion) to invest in his energy, telecommunications and finance group to tap opportunities in the world's second-fastest growing economy.
The 48-year-old chairman of the Anil Dhirubhai Ambani Group said he will expand his insurance and mutual fund business, luring investors to a stock market trading at a record high.
Overseas investment in India is projected to double this year to $30 billion and share sales are at a record. Ten years after excessive overseas borrowing triggered the Asian financial crisis, Indian corporations are raising funds at a record pace.
``Global liquidity tightening and reversal of optimism over the sustainability of growth of emerging markets like India and China and Brazil are the risks to Indian companies' performance,'' said Mahendra Jajoo, who manages the equivalent of $2 billion in Indian debt at ABN Amro Asset Management Co. in Mumbai. ``Though nothing of that sort seems to be on the horizon.''
In India, borrowing records are tumbling as banks need capital to sustain lending growth and companies raise funds to buy plants, machinery and overseas rivals. Record inflows are also propelling the rupee currency to its biggest quarterly advance in more than three decades.
Devalued Baht
Ten years ago yesterday Thailand was forced to devalue its baht currency because Thai corporations had loaded up on too much overseas debt. That sparked off a financial crisis that swept through Asia as corporations such as South Korea's Daewoo Group defaulted on billions of dollars of loans. India was largely insulated from the crisis because of government curbs on overseas borrowings.
India's central bank, which capped overseas borrowings by companies at $500 million a financial year, on Dec. 4 allowed an additional $250 million of loans with an average maturity of more than 10 years, subject to approvals.
India on May 18 barred real estate companies from raising funds overseas to develop townships and capped the ceiling on costs of loans raised abroad in a bid to stem capital flows that pushed the rupee to a nine-year high in May.
Record Profits
For Anil Ambani, record profits are luring investors to shares in his companies and cutting the amount he needs to pay to secure loans. Shares of Reliance Communications Ltd., India's second-biggest mobile-phone operator, are at a record high as the company adds more than a million users a month in the world's fastest-growing mobile-phone market.
The wireless operator will pay less interest to borrow $1 billion compared with a $500 million loan arranged last year, three bankers involved in the financing said last month.
Reliance Capital Ltd.'s stock gained 85 percent this year, also to a record. The group, based in Mumbai, plans to invest 20 billion rupees in its insurance business through Reliance Capital, Ambani told shareholders at the company's annual general meeting today. The fund manager will have assets worth $15 billion under management in the ``next few weeks,'' he said.
``In India mutual fund investors account for only 3 percent of the population,'' Ambani said. ``That is very low compared with global standards and gives us limitless opportunities.''
ICICI Bank Ltd. last month sold half of its $5 billion stock offering, the biggest by an Indian company, to overseas investors and Tata Steel Ltd. arranged a record loan to fund its $12 billion acquisition of Corus Group Plc.
Anil Ambani, who split Reliance Group's assets with his elder brother Mukesh Ambani in 2005, also controls Reliance Energy Ltd., the nation's second-biggest utility by sales. Mukesh runs Reliance Industries Ltd., India's most valuable company
Last Updated: Tue, 03 Jul 2007 19:56:00
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