Bloomberg News

Billionaire Ambani Invests in Gates-Funded Nuclear Company

December 23, 2011

(Updates with comment from analyst in fourth paragraph.)

Dec. 22 (Bloomberg) -- Reliance Industries Ltd., operator of the world’s biggest oil refinery complex, has invested in Terra Power LLC, a nuclear design and engineering company partly funded by Microsoft Corp. Chairman Bill Gates.

The minority investment was made through a unit and is one of various in the “broader energy sector,” Reliance said in an e-mailed statement today. The Mumbai-based energy explorer and refiner, controlled by billionaire Chairman Mukesh Ambani, didn’t disclose the size of the investment.

Gates, ranked the world’s second-richest man in March by Forbes magazine, visited China earlier this month to promote a new technology for fourth-generation nuclear reactors developed by Terra Power. Reliance, India’s biggest company by market value, is seeking to widen its businesses as slowing economic growth globally cuts fuel demand and as output from India’s biggest natural gas deposit declines.

“Reliance has been constantly trying to diversify, they want to be in the whole energy chain,” said U.R. Bhat, managing director of Dalton Capital Advisors India Pvt. in Mumbai. “In the state they are now, they have to invest in businesses with big potential and nuclear has that potential. Nuclear is seen as the energy of the future and it’s going to play a huge part.”

Reliance had 614.9 billion rupees ($11.7 billion) in cash and equivalents as of Sept. 30. Falling gas output has driven the company’s shares 29 percent lower this year, the worst decline since 2008. The stock fell 0.2 percent to 746.45 rupees at 2:32 p.m. in Mumbai, while the benchmark Sensitive Index was little changed.

‘Traveling-Wave Reactor’

Terra Power, based in Bellevue, Washington, counts Gates and Khosla Ventures, backed by venture capitalist Vinod Khosla, among its investors, according to its website. The company is designing a nuclear reactor that uses low-enriched uranium and produces less waste.

Development of Terra Power’s “traveling-wave reactor” may require an investment of $1 billion in the next five years and they will cost “billions” to build, according to Gates, 56, who spoke to China National Nuclear Corp. about the new nuclear technology during his visit on Dec. 7. The “new approach” to nuclear power is still at an early stage and its adoption won’t move fast, Gates said.

The reactors need uranium to start up and can “run for decades on depleted uranium” without enrichment or reprocessing, Terra Power said on its website.

China Experimental Reactor

China in July connected to the grid an experimental, locally made, fast-neutron reactor that produces less radioactive waste than current designs, in a move that may help the nation build safer atomic plants after Japan’s 40-year-old Fukushima Dai-Ichi plant was crippled by an earthquake and tsunami on March 11.

Reliance, which owns chemical plants, fuel outlets and a retail-store chain, is diversifying from its energy business in India to telecommunications, hotels and financial services. The company bought shale gas acreages from three companies in the U.S. last year and plans to buy assets in Canada.

Bank of America Corp. picked Ambani to join its board as the lender sought to expand revenue from outside the U.S., the Charlotte, North Carolina-based bank said March 16.

--Editors: John Chacko, Aaron Sheldrick

To contact the reporter on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net


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