"Rich as kings, highly educated and urbane, they hold the world in the palm of their well-manicured hands," says The Daily Telegraph's Clive Aslet of today's Indian titans. And a growing number of these "Bollygarchs" are making waves in London. The latest are the Ruia brothers, who stand to make billions from the imminent flotation of Essar Energy on the London Stock Exchange.
Shashi and Ravi Ruia are regarded as "a shrewd but superstitious duo", says The Times. "They consider 13 to be their lucky number and will not fly together." Essar Energy is just part of the Ruia's huge steel-to-retail conglomerate and the brothers are only floating 25% of the firm. But a lot is riding on this $2.5bn float the City's largest for four years (see below).
The Ruias have a good deal at stake too. A decade ago they earned the dubious distinction of becoming the first Indian firm to default on a $250m foreign currency loan. But despite being "new kids on the block" compared with dynasties such as the Tatas, Birlas and Ambanis, says Singapore's Business Times, their star is rapidly rising. Forbes reckons the family has a collective fortune of $13.6bn, ranking them fifth among India's billionaires.
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Refreshingly, the family seems remarkably free of infighting, says The New York Times. For years the brothers shared an office, sitting at "opposite ends of a long room [decorated] with mahogany wall panelling and paintings", and they always get together when India plays cricket.
Business runs in the Ruias' veins, says the FT. They are members of the Marwari community from Rajasthan renowned for its commercial acumen and drive. The bones of their empire was a shipping and exports business founded by their father, Nand Kishore Ruia, in 1956. He named it Essar after the first letters of his sons' names S and R. The brothers moved into port and deep-sea pipeline construction. Their big break came in 1990 when they took advantage of India's liberalising economy to move into sponge iron, "an unglamorous but essential raw material for steel", notes The Times.
The move vastly increased revenues, enabling the brothers to tap hot growth industries, such as telecoms. In 2000, they struck a deal with Hong Kong tycoon Li Ka-shing to form Hutchison Essar. When Li Ka-shing sold out to Vodafone in 2007, the value of the Ruias' 33% stake soared. The combined company is currently India's third-largest operator.
The Ruias now have their fingers in countless pies in India, observes the Canadian Globe & Mail. But, for the moment, the family's main focus is on building Essar's international oil and energy business. Having moved strongly into North America, it is currently in talks to buy three refineries in Britain and Germany from Shell. So whatever the outcome of the London float, this is an Indian dynasty to watch.
Should you buy into this blockbuster IPO?
"Coming to a stock exchange near you: a blockbuster flotation promising stonking growth most of UK plc can only dream of," says Louise Lucas in the FT. The "selective statistics" being put out by Essar Energy are "enough to titillate even the most jaded fund manager". The group is selling the float as a story of India's growth. The line goes that, as the country's second-largest energy player, "helping the ... nation switch on the lights (just 44% of Indian households currently have access to electricity) beats taking candy from kids". But this flotation "should ignite none but the brave".
Electricity can be dodgy in emerging markets, and so can flotations. Rival Reliance Power listed in a storm of hype in 2008, but plunged horribly on its debut. In fact, most of the seven Indian energy groups that listed in the past two years now trade below their initial public offering price. Having seen off Hong Kong and New York to secure the business, this float should have been "a sweet happening" for London, says David Hellier in City AM. But investors, it seems, have cold feet. Concerns focus on the extent to which the London subsidiary "will be truly independent from control from Bombay".
The promise to appoint a heavyweight independent director might make a difference, but "more may be required".
Ultimately, anyone buying into this story "has to be comfortable with the Ruia family", a City source told The Daily Telegraph. And, for many, the $250m Essar Steel default of 1999 still looms large. The Ruias argue that there were mitigating factors in that debacle: the notorious volatility of the steel industry and the fact that international investors exited India en masse in 1999 because they were spooked by atomic weapons testing. But, to many, those sound like excuses.
"I hope one learns from one's mistakes," Shashi Ruia said recently. That's a view that will resonate with many investors.
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