Mukesh Ambani and Gautam Adani tiptoed around each other for years to reach the top two rungs of Asia's wealth ladder. While one of them built an empire in telecom and retail, the other established a lock on transport and energy distribution.
Increasingly, though, the two billionaires from India's Gujarat state are starting to overlap, setting the stage for a clash that could alter the country's business landscape. Given the duo's proximity to politics, the shock is bound to reverberate through the corridors of power as well.
In the latest sign of their coalescing orbits, the Adani Group has discussed the idea of buying a stake in Saudi Aramco from the oil-rich kingdom's Public Investment Fund, potentially linking the investment to a broader tie-up or asset swap deal, according to Bloomberg News.
This is just months after Ambani's Reliance Industries Ltd. and Aramco called off more than two years of talks to sell 20 per cent of the Indian conglomerate's oils-to-chemicals unit to the Saudi behemoth for about $20 billion to $25 billion-worth of Aramco shares.
In an attempt to cement the partnership, Reliance even got Aramco chairman Yasir Al-Rumayyan to join its board as an independent director last year.
Aramco, the No. 1 crude oil producer, is still a better fit with Ambani's Reliance, which owns the world's largest refining complex at Jamnagar in Gujarat. Reliance is also a leading manufacturer of polymers, polyester and fibre-intermediates.
But, Adani, too, has wanted to enter petrochemicals by putting up a $4 billion acrylics complex near his Mundra port in Gujarat in collaboration with BASF SE, Borealis AG, and Abu Dhabi National Oil Co., or Adnoc. Covid-19 put a dampener on the plan.
This was not the first retreat from his petro-ambitions: Nothing also came of a plant in Gujarat, which was looking to rope in Taiwan's CPC Corp.
Adani's main interest in hydrocarbons continues to be coal. He mines it in India and Indonesia, produces coal-fueled power at plants like the one in Mundra and berths vessels laden with the stuff at his vast network of ports. Exports of coal from the Carmichael mine would start soon, the group said in December, after slogging for a decade over the environmentally controversial project in Australia's Galilee Basin.
But while coal is very much India's past and present, it's not the future. Which is why Adani made a big bet on solar power. He also started circling around plastics.
After Adani set up a new petrochemicals subsidiary last year, it became clear that sooner or later he was going to try and breach the moat of stable cash-flows established by the rival group's founder Dhirubhai Ambani, India's "Polyester Prince" (and father of Reliance's current boss). The tantalising question is whether Adani's ambitions include a refinery as well.
Back in 2018, Aramco and Adnoc were going to partner with state-owned Indian firms to set up a mammoth $44-billion refinery. That plan has gone nowhere after the project lost its original site in India's Maharashtra state because of local political opposition.
Could the Adani Group insert itself into a revival of that project? For now, the preliminary talks with Aramco seem to have a modest focus: collaboration in renewable energy, crop nutrients or chemicals, according to Bloomberg News. However, if Aramco is still keen on owning a captive refinery in India, the contours of its Adani partnership might well expand.
That would put the billionaires in direct competition — though not for the first time. In June last year, Ambani told his shareholders he was embarking on his life's "most challenging" undertaking by making a pivot to clean power and fuel. He followed up with a blitzkrieg of acquisitions in the field.
Before that, it was Adani who wanted to be the world's largest renewable energy producer by 2030. By revealing his plans for four gigafactories in Jamnagar — one each for solar panels, batteries, green hydrogen and fuel cells — Ambani put Reliance in the lead role in India's climate-change narrative.
And he did it just before the COP26 summit in Glasgow where Prime Minister Narendra Modi made a bold commitment to lower the country's dependence on fossil fuels. Analysts like to clump Ambani and Adani together as a kind of India Inc. duopoly.
"By backing the '2As' at the expense of other companies, both domestic and foreign, the government is encouraging an extraordinary concentration of economic power," economist Arvind Subramanian, an adviser to the Modi administration until 2018, and Josh Felman, a former International Monetary Fund official in New Delhi, wrote in a recent Foreign Affairs article about how India's inward turn could stymie its rise.
The two superstar business groups are indeed reducing the competitive intensity in the broader economy by swallowing smaller and weaker firms adjacent to their operations. Still, every indication suggests they will compete fiercely against each other.
Ambani took the telecom route to emerge as the czar of India's consumer data; Adani wants to come in from the other end by providing storage services to bits and bytes, powered by green energy. Ambani is engaged in a brutal contest with Amazon.com Inc. for control of the grocery supply chain.
Adani warehouses grain for the state-run Food Corp. of India and owns the country's No. 1 edible oil brand.
Their balance sheets are different. For the past five years, firms linked to Adani have been hyperactive in the international debt market, borrowing more than any other Indian company. Ambani, meanwhile, has turned Reliance into a sparsely leveraged fortress — not a bad place to be as global interest rates harden.
Visions are different, too. While Adani, 59, supplies grid power (and cooking gas, in partnership with with France's TotalEnergies SE) to households, Ambani, who's five years older, imagines a future in which "every house, every farm, factory and habitat could, in principle, free itself from the grid by generating its own power."
Will the two billionaires try to shape policies — and influence politics — according to their competing goals? You bet. A confrontation looks almost guaranteed. Investors in India should grab some popcorn.
Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.
Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.