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19 February 2020
INVESTMENT

Saudi Aramco, Reliance accelerate refinery stake sale talks

The deal could be the biggest for Saudi Aramco since the acquisition of a majority stake in SABIC for $69 billion last year

Saudi Aramco officials and bankers started due diligence at Reliance’s offices in Mumbai earlier this month/Bloomberg

by William Mullally

Reliance Industries’ talks to sell a minority stake in its oil-to-chemical division to Saudi Aramco have been gathering pace in recent weeks.

Saudi Aramco officials and bankers started due diligence at Reliance’s offices in Mumbai earlier this month. Both parties are trying to overcome differences over the deal’s structure, which stalled the process last year.

Indian billionaire Mukesh Ambani’s Reliance is keen to sign a binding agreement before the next annual shareholders meeting, which is due to take place before the end of September 2020.

Reliance in August 2020 valued its oil-to-chemicals division at $75 billion including debt, implying a $15 billion valuation for the 20 per cent stake. If the deal closes at this value, it will be the largest transaction in India since Walmart’s $16 billion acquisition of a majority stake in Flipkart Online Services.

In August 2019, Ambani told shareholders that Reliance and Saudi Aramco had agreed to a non-binding deal for a 20 per cent stake in the oil-to-chemical operations. However, in December the Indian government requested a court to stop the proposed sale to help ensure the Mumbai-based company has enough assets to pay arbitration claims in an unrelated case.

Reliance has been selling assets from mobile-phone towers to a 49 per cent stake in its fuel retail business to reduce the leverage that is risen over the past few years as it poured money into new sectors such as telecommunications.

 


RELATED STORIES: Saudi Aramco Reliance Mukesh Ambani

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