Saudi Aramco chairman and Governor of the Kingdom’s wealth fund Public Investment Fund (PIF) Yasir Al-Rumayyan is likely to be inducted on the board of Reliance Industries, paving the way for a deal between the two petrochemical giants. Mr Al-Rumayyan may either be inducted on the board of Reliance Industries or that of the newly carved oil-to-chemical (O2C) subsidiary at the upcoming annual shareholders (AGM) meeting scheduled on June 24, sources told NDTV.
Mukesh Ambani had announced, at the AGM in 2019, that Reliance Industries was discussing the sale of 20 per cent stake in the oil-to-chemicals (O2C) business to Aramco, the world’s largest oil exporter. Reliance’s O2C business comprises oil refineries at Jamnagar in Gujarat and its petrochemical assets. The deal was due to conclude by March 2020, but hasn’t taken place as yet. The two companies have not yet disclosed the reasons for the delay.
Talks have resumed this year and the two companies are reportedly discussing a cash and share deal. Under the proposed deal, Aramco would initially pay for the stake purchase through shares and then make staggered cash payments over a period of several years.
Reliance Industries’ oil-to-chemicals business comprises refineries and petrochemical plants, as well as a 51 per cent stake in the fuel retailing business. It, however, does not include the upstream oil and gas producing assets such as the KG-D6 block in Bay of Bengal.
Reliance Industries recently announced carving out the O2C business as a separate subsidiary, on the lines of Jio Platforms and Reliance Retail, to support strategic partnerships and new investors. Jio Platforms, the subsidiary of Reliance Industries, owns the digital business and Reliance Retail holds the offline and online retail businesses.
The deal, if and when it materializes, would be a win-win situation for both Reliance Industries and Aramco, according to analysts. The cash inflows from the stake sale will help Reliance Industries to make bigger investments in the competitive retail space. Aramco, on its part will not only have a stake in one of the world’s best refineries, but will also have access to a fast-growing market.
Expectations are building up ahead of the AGM. Reliance Industries is likely to provide some updates on Saudi Aramco deal and announce a new smartphone in partnership with Google, in addition to the possible induction of Saudi Aramco’s chairman onto the board of Reliance Industries.
In the past, the AGMs has been an occasion for new investors to join the digital and retail businesses of Reliance Industries.