From Stock Market Star to Debt Trap: Inside Anil Ambani’s Wealth Wipeout

Anil Ambani, the prominent billionaire, who is also the head of the Reliance Group is presently experiencing a dramatic fall from being the stock market star to being in a debt trap. His journey is marked by financial troubles, legal battles, and a significant decline in his market capitalisation as well.

The Enforcement Directorate (ED) carried out several raids at over 35 premises and 50 companies which are linked to Anil Ambani's Reliance Group (RAAGA Companies), in connection with a money laundering probe related to the Yes bank loan fraud case on Wednesday.

Anil Ambani-led Reliance companies have had their own fate but this is not the first time that the billionaire is under the harsh scrutiny of authorities and is going through financial deterioration.

Billionaire Tycoon To Business Cautionary Tale

According to the financial analyst Ashish Mishra,  "this is the story of how ambition, debt, and disruption unraveled an empire - and the powerful lessons it holds for every entrepreneur and investor."

In 2008, Anil Ambani was worth $42 billion—richer than Mukesh, running one of India’s largest conglomerates, and commanding investor trust like few others.

"Today? He claims his net worth is zero," Mishra wrote in an extensive post on LinkedIn.

Meteoric Rise: As the Reliance empire split in 2005, Anil Ambani walked away with sectors like telecom (RCom), power (Reliance Power), infrastructure (Reliance Infra) and Finance (Reliance Capital) in his bag.

By 2008, not only was he the richest man in India but his companies were also stock market favourites and Reliance Power's IPO had raised Rs 11,563 crore which was the biggest in Indian history at the time.

"Anil became the poster child of New India’s entrepreneurial ambition," Mishra wrote in his post.

The Downfall: To fund a rapid expansion of his companies Anil Ambani took massive loans but the revenues did not grow fast enough and the execution faltered.

Additionally, Reliance Power's IPO, which was believed to be hyped up to the skies, crashed 17% on its listing day. The retail investors were also furious and the overall trust of the investors started to erode.

Further, his flagship Reliance Communications, could not survive India's brutal telecom price war and it was crushed by Jio's entry into the sector in 2016, was facing a debt worth Rs 46,000 crore debt default and eventually filed for bankruptcy in 2019.

Anil Ambani's other ventures such as reliance Capital and Reliance Power and Infra also started facing regulatory scrutiny, poor margins, delays, and mounting liabilities.

Legal Setbacks: "In 2020, Anil told a UK court that he was no longer a billionaire. Indian banks began seizing assets and enforcing personal guarantees. Legal battles intensified, as creditors closed in on what was left," Mishra wrote in his post.

What Went Wrong?: According to him, a combination of factors such as unsustainable debt, strategic missteps, the fact that Anil Ambani may also have underestimated Jio, the lost market trust as well as the legal and regulatory troubles is what went wrong with Anil Ambani's journey.

Also Read: From Billionaire to Legal Battles: The Rise, Fall, and Scrutiny of Anil Ambani