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RIL unveils blockbuster US$15 billion deal with Saudi Aramco

IBEF:  August 13, 2019

Reliance Industries Ltd (RIL) is selling a 20 per cent stake in the company’s flagship chemicals and refining business to Saudi Aramco in a deal valued at US$ 15 billion. The deal is a part of a plan to make RIL a zero-debt company in coming years.

Saudi Aramco will invest into Reliance for a 20 per cent stake in oil-to-synthetic chemical division at an enterprise estimation of US$ 75 billion for the O2C division, which will be demerged into a separate subsidiary in the following five years. In addition to the stake deal to Aramco, RIL will raise US$ 1 billion from BP Plc, which will obtain a 49 per cent stake in RIL's petro-retailing business for Rs 7,000 crores (US$ 1 billion) said by Ambani.

Ambani is aiming to cut RIL's ballooning debt in the wake of spending as much as US$ 50 billion to move its telecom business to the top position in India within three years of starting operation, surpassing Bharti Airtel Ltd and Vodafone Idea Ltd.

As a major aspect of the proposed deal, Saudi Aramco will also supply 500,000 barrels for each day of crude oil on a long-term premise to RIL's Jamnagar refinery.

"This deal couldn't just ensure constant crude oil supply to RIL's twin refineries yet additionally get pricing advantage and give RIL cushion from the uncertain global crude oil market," an expert with a domestic brokerage said on state of namelessness. "For Saudi Aramco, this deal gives a much looked for after foothold in India." The proposed deal, when finished, is relied upon to essentially improve RIL's debt profile.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.