Billionaires: Radhakishan Damani plans fivefold growth for discount DMart chain

In our fortnightly round-up of the world's super wealthy, activist investor Daniel Lob’s call for ESPN spinoff gets a tepid reception at Disney and MacKenzie Scott donates $39m to a US non-profit organisation

Radhakishan Damani, 68, is a self-made billionaire who steered his DMart supermarket empire to a blockbuster listing in 2017. Photo: @RK_Damani_Bot
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Radhakishan Damani

Indian billionaire Radhakishan Damani’s discount supermarket chain, DMart, plans to boost its store count fivefold as it seeks to grow market share and hold its own against aggressive expansion from the likes of Mukesh Ambani’s Reliance Retail.

Avenue Supermarts, which currently runs the fourth-largest number of convenience stores in India, could scale up the chain to 1,500 supermarkets from 284, chief executive Neville Noronha said.

“Large players can happily operate without worrying about each other,” Mr Noronha said. “There’s no need to worry about that for another 20 years — the headroom for growth is awesome.”

The company opened its highest-ever 50 stores in the year to March and wants to tap India’s middle-class, which, according to some researchers, could account for as much as half of the country’s almost 1.4 billion population.

Amid rising inflation, this segment is also looking hard for bargain deals — something DMart is known for. Besides adding stores, DMart is also attempting to scale up its unprofitable e-commerce business.

“The sky’s the limit for any brick-and-mortar retailer in the country,” Mr Noronha said.

“You have to focus on opening more and more stores” as the organised grocery market in India was nowhere near saturation, he said.

Mr Damani, 68, is the self-made billionaire and founder of DMart, who steered his supermarket empire to a blockbuster listing in 2017. The stock has jumped 1,370 per cent since its listing, giving Mr Damani a net worth of $22.1 billion, according to the Bloomberg Billionaire’s Index.

India’s organised retail market is still at a nascent stage and estimated by the government’s export promotion agency to be growing between 20 per cent and 25 per cent annually.

Avenue Supermarts’ net income for the June quarter surged more than six times to 6.4bn rupees ($80.6 million) compared with the same period last year, as the local economy recovered from the Covid-19 pandemic-related curbs. Revenue also nearly doubled.

Its online business, however, remains a weak spot. The company's e-commerce business posted a loss of 1.42bn rupees in the latest quarter, in the face of intense competition.

Mr Noronha conceded that breaking into the online retail market has been “tough”, but that DMart plans to add more online fulfilment centres to the two it has in Mumbai.

Heightened inflation would be a boost for the discount chain, Mr Noronha said.

“In times of inflation, the general understanding is people look for more deals,” he said. “People want products available at cheaper prices, so it helps a business like ours.”

Daniel Loeb

The first time billionaire investor Daniel Loeb began pushing for change at Walt Disney, he got his wish. In 2020, his hedge fund Third Point called on the company to suspend its dividend and go all-in on streaming.

Days later, the company announced it was betting big on growing its trio of streaming services, Disney+, the sports-focused ESPN+ and adult-focused Hulu. Just two years later, Disney surpassed streaming pioneer Netflix in total subscriptions.

Now, after a brief hiatus, Mr Loeb is back and investing $1bn in Disney, emboldened by making the right call on streaming.

He wants Disney to spin off ESPN. Mr Loeb also told Disney’s chief executive Bob Chapek that the company should accelerate the timetable for acquiring Comcast’s minority stake in Hulu, the streaming service it controls.

Mr Loeb’s ideas are getting a tepid reception this second time around from senior entertainment executives and some analysts. They say these changes would deplete Disney of revenue at a time the company continues to lose money on streaming.

Disney was reported to have been considering spinning off ESPN last year before scrapping the idea. The cable sports network’s streaming service, ESPN+, has become a centrepiece of collection of streaming services Disney sells to consumers.

Mr Chapek credited live sports on TV and ESPN+ for helping to power Disney’s third quarter, where operating profit jumped 50 per cent.

Barclays forecasts that Disney’s sports networks could generate as much as $12.4bn in revenue and $3.9bn in operating income this fiscal year.

A spinoff would be financially dangerous to Disney, given the importance of the cash flow it provides the company through cable fees and advertising, MoffettNathanson analyst Michael Nathanson wrote.

Mr Loeb’s Hulu proposal met with similar scepticism. Disney has agreed to pay at least $5.8bn to acquire Comcast’s one-third stake in the streaming service in 2024. It could be forced to pay a premium to complete the deal earlier, which would eat into its cash on hand.

“Focusing on spinning off ESPN and buying in Hulu for a premium seem to be dusting off an older playbook when the market valued assets on different metrics rather than acknowledging the newer important reality of growing sustainable cash flows,” Mr Nathanson wrote.

MacKenzie Scott

Billionaire philanthropist MacKenzie Scott donated $38.8m to Junior Achievement USA and 26 local operations — the largest single gift in its 103-year history — the US education non-profit said.

Like all of Ms Scott’s nearly $12bn in donations since 2019, her gift to Junior Achievement USA is unrestricted, meaning the Colorado-based non-profit, which prepares students for adulthood by teaching them financial literacy, career skills and business ownership training, can use the funds for any project it wants.

Jack E Kosakowski, Junior Achievement USA’s president and chief executive, said the gift was “a huge, pleasant surprise” and raised morale.

Junior Achievement USA will receive $10m, while 26 local Junior Achievement operations will split $28.8m based on the evaluation of Ms Scott and her team.

The author and philanthropist does not comment on her donations beyond her Medium blog. Her gifts are only announced if and when the groups receiving them confirm the donations.

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Mr Kosakowski said he is thrilled by Ms Scott’s unrestricted gift because it can be used to modernise the group’s technology infrastructure. The $10m will also help expand the non-profit’s digital educational offerings and add volunteers in underserved areas.

Ms Scott, currently worth about $42bn according to Forbes, has signed the Giving Pledge, a promise from many billionaires to donate more than half their wealth.

As part of her 2019 divorce from Amazon founder Jeff Bezos, Ms Scott received 4 per cent of the e-commerce company’s shares. Since then, she has worked diligently to make unrestricted donations quickly.

Initially, Ms Scott focused on funding that would generate more racial and gender equity. However, in recent donations, she has also singled out long-established non-profits with a focus on their communities.

“Communities with a habit of removing obstacles for different subsets of people tend to get better for everyone,” she wrote in her March blog post.

Now, she is supporting Junior Achievement, which educates more than 12.5 million students in 115 countries.

Masayoshi Son

In a stretch of difficult years, Masayoshi Son has had a particularly rough time.

Just eight days after SoftBank Group reported a record loss for the last quarter, its shares fell after a report that hedge fund Elliott Management has sold off almost all its position in the Japanese conglomerate. SoftBank’s stock is off almost 50 per cent from its peak last year.

Elliott made the move earlier this year, when tech stocks including SoftBank’s were in the grip of an extended sell-off, the Financial Times reported.

The exact size and timing of the sale were unknown, though the US-based activist investor also sold a substantial amount of shares at a profit last year, it added. Elliott had accumulated a stake of close to $3bn in SoftBank by February 2020.

Elliott’s dumping of SoftBank shares comes as investors increasingly lose confidence in Mr Son and his ability to close the valuation gap between the company and its portfolio holdings.

SoftBank’s plan to cash in on its purchase of chip architect Arm remains stalled amid a sluggish chip market.

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One week ago, SoftBank reported a record $23bn quarterly loss, which Mr Son compared to a humiliating rout by a feudal lord.

After marking down valuations throughout the Vision Fund’s portfolio spanning hundreds of companies, Mr Son apologised for his hubris and over-confidence.

With concerns raised over the conglomerate’s own financial stability, Mr Son pledged to slash operating costs, lower headcount and restrain himself from what he thought might be bargains in the start-up world.

Fortress Investment Group, which SoftBank had acquired with much fanfare at more than $3bn in 2017, was on the block, Mr Son said.

Just two days later, SoftBank said it was letting go of a third of its prized stake in Chinese e-commerce giant Alibaba Group Holding to shore up its finances.

Mr Son’s early investment in Alibaba in 2000 is one of venture capital’s legendary investments, and cemented his claim as a visionary stock picker.

His losses go beyond the company, too. The tech market swoon means the Japanese billionaire is personally down more than $4bn on a series of side deals he set up to help boost his own compensation, Bloomberg News reported.

Updated: August 22, 2022, 5:00 AM