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<ul><li>Share price of <keyword id="6484187" type="General" weightage="20" keywordseo="ril" source="Orion">RIL</keyword> has doubled between the announcement of the deal and its recent peak on October 14.</li><li>In August 2019, the companies had signed a non-binding letter of intent for a potential 20% stake by Saudi Aramco in RIL.</li><li>On November 22, shares of RIL fell nearly 4% as the deal has been put on hold for now.</li></ul>The much anticipated deal between Reliance Industries (RIL) and Saudi Aramco has been <a href="https://www.businessinsider.in/business/news/reliances-15-billion-deal-with-saudi-aramco-has-been-called-off/articleshow/87811630.cms">put on hold</a> and the disappointment of investors is being reflected in the share price of RIL. Both the companies, on November 20, decided to re-evaluate the proposed investment of Saudi Aramco in <keyword id="3820" type="General" weightage="20" keywordseo="mukesh-ambani" source="Orion">Mukesh Ambani</keyword>’s oil-to-chemical conglomerate. Meanwhile, shares of RIL have doubled between the announcement of the deal and its recent peak on October 14. <div type="image" title="ril char" height="900" width="1200" msid="87842195" hostid="261"></div> In August 2019, both the companies had signed a non-binding letter of intent for a potential 20% stake by Saudi Aramco in RIL. Five instances when RIL and Saudi Aramco gave investors hope of a big ticket deal <ul><li>August 2019</li></ul>RIL and Saudi Aramco signed a non-binding letter of intent in August 2019 for a potential 20% stake acquisition by Saudi Aramco in the oil-to-chemical business. <ul><li>August 2020</li></ul>In a post-earnings call of Saudi Aramco with analysts, its chief executive Amin Nasser said, "With regard to the Reliance deal, all I can say at this stage, it's going through due diligence. So, depending on the due diligence, we will make our decision after we complete the due diligence on that deal," said Nasser. <ul><li>June 2021</li></ul>Mukesh Ambani announced that the proposed deal with Saudi Aramco will likely be finalised this year during the 44th Annual General Meeting (AGM) on June 24. “As an important part of this vision of achieving accelerated growth, we look forward to welcoming Saudi Aramco as a strategic partner in our O2C business," said Ambani. <ul><li>July 2021</li></ul>Investors' hopes of a deal to happen soon were raised after RIL appointed Saudi Aramco’s Chairman Yasir Al-Rumayyan as an independent director of the company effective from July 19, 2021. <ul><li>August 2021</li></ul>CEO of Saudi Aramco Amin Nasser said the company is still working on the deal to invest in Reliance Industries, as reported by Bloomberg. However, RIL clarified that it will continue to be Saudi Aramco's preferred partner for investments in the private sector in India and will collaborate with Saudi Aramco &amp; SABIC for investments in Saudi Arabia. Saudi Aramco is one of the largest petroleum and natural gas companies in the world, based in Dhahran, while SABIC (Saudi Basic Industries Corporation), a subsidiary of Saudi Aramco, is into chemical manufacturing. Analysts at JP Morgan <a href="https://twitter.com/CNBCTV18Live/status/1462596690041470984/photo/1">reportedly </a>said that the development is a “clear sentiment negative”, but will have limited impact on RIL’s financials. Besides, a significant deleveraging (debt reduction) has already been done by the oil-to-chemical major, which is positive, according to JP Morgan. The global brokerage firm has a ‘neutral’ rating on the stock as it expects the share price to rise 7% at ₹2,575. Besides, RIL has shifted its focus to its new energy business at Jamnagar, which it aspires to make it among the largest integrated renewable energy manufacturing facilities in the world. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/paytm-has-lost-8-billion-in-valuation-in-two-days-of-listing/articleshow/87840891.cms">Paytm has lost $8 billion in valuation in two days of listing</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/telecom/news/airtels-popular-prepaid-plans-may-now-cost-you-up-to-25-more/articleshow/87840177.cms">Airtel’s popular prepaid plans may now cost you up to 25% more</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/sensex-tanks-over-400-points-in-early-trade-nifty-trading-at-17764-reliance-industries-maruti-bajaj-finance-kotak-bank-and-bajaj-finserv-top-losers/articleshow/87841278.cms">Sensex tanks over 400 points in early trade, Nifty trading at 17,764 — Reliance Industries, Maruti, Bajaj Finance, Kotak Bank and Bajaj Finserv top losers</a>

Reliance Industries’ investors dump shares after Mukesh Ambani's Aramco deal fails after 27 months of negotiations

New Delhi, May 13 () Its recent capital raising decisions and weak oil prices may be raising doubts among investors on the conclusion of Reliance Industries' USD 15 billion deal with Saudi Aramco but there still exist significant advantages for the Saudi firm to conclude its investments in the oil-to-chemical business of the Indian giant, an analyst said on Wednesday. HSBC Global Research in a note said Aramco buying 20 per cent in O2C business of Reliance would allow the Indian firm to build financial muscle as it carves out space for itself in highly competitive omni-channel retail. Scepticism may be rising that Saudi Aramco's proposed investment the O2C business, which RIL values at USD 75 billion, will not materialise. "With RIL announcing its first-ever capital raising via a rights issue; the recent infusion of capital into (the firm's digital arm Jio Platforms) by Facebook; falling oil prices disturbing the financial position and attractiveness of oil assets; and no increment newsflow from Aramco, investors may be starting to believe that Aramco is no longer interested," it said. However, RIL has reiterated that due diligence is being done and has filed for the separation of its oil-to-chemicals (O2C) business into a wholly-owned subsidiary. "We still see enough reasons for Aramco to acquire a stake (in RIL's O2C business). With a stake, Aramco would not just have a stake in one of the world's best refineries and largest integrated petrochemical complex but also access to one of the fastest-growing markets - a ready-made market for 500,000 barrels per day of its Arabian crude and offering a potentially bigger downstream role in future," it said. Richest Indian Mukesh Ambani had in August last year announced talks for sale of 20 per cent stake in the O2C business, which comprises its twin oil refineries at Jamnagar in Gujarat and petrochemical assets, to the world's largest oil exporter. The deal was to conclude by March 2020 but is now expected within the current year. HSBC said while the timing may be far from ideal, RIL might be a better fit for Aramco than the Saudi OTC. Aramco expects to decide by H1 2020 whether to complete its joint venture with SABIC for a home-grown oil-to-chemicals (OTC) project at a guided price of at least USD 20 billion. "However, Aramco has struggled in the past to profitably execute organic downstream projects in the chemicals space. In fact, with Rabigh, Sadara and Saudi Kayan, there is no history of a chemical plant in Saudi Arabia built at a cost of over USD 10 billion that has generated an economic return. "We believe that if it comes down to capital discipline, it would be the Saudi OTC project that could be scrapped in favour of an investment in RIL," it said. HSBC said the Aramco deal could provide significant financial muscle to RIL. Besides creating a benchmark valuation for its OTC business of USD 75 billion, the deal would provide USD 15 billion in additional cash flow, shifting RIL into a strong net cash position from net debt. HSBC, however, valued the O2C business at USD 65 billion. "Once the money from the rest of its announced transactions flows into RIL, we believe that combined with its treasury shares, RIL will have USD 34 billion in assets that should allow it to expand in the competitive omnichannel retail space," it said. "We believe RIL's diversified businesses, asset monetisation and capital raising in the current environment make it financially stable. In addition, the expansion of RIL's omnichannel retail and digital businesses should allow it to grow rapidly," it added. RIL had announced three equity deals in as many weeks, including USD 5.7 billion investment from Facebook Inc, USD 750 million from Silver Lake Partners and USD 1.5 billion from Vista Equity Partners, in Jio Platforms -- the holding company for its wireless and technology business. It also sold a 49 per cent stake in its auto and jet fuel retailing business to UK's BP plc for USD 1 billion. Besides refineries and petrochemical plants, the O2C business also comprises 51 per cent stake in fuel retailing business. It, however, does not include the upstream oil and gas producing assets such as the flagging KG-D6 block in the Bay of Bengal. RIL's refineries are one of the most complex in the world, allowing it to earn a significant premium to the benchmark Singapore gross refining margin. Its petrochemical complexes rank among the biggest in the world, whose dependency on outside raw materials is minimal. RIL has leadership positions both in the domestic polymer and polyester markets. According to RIL, every second child going to school in India wears a uniform made from RIL's polyester. ANZ ANZ ABMABM

Significant advantages exist in Reliance-Aramco deal: Report

Mumbai, Jul 15 () Asia's richest man Mukesh Ambani on Wednesday said his group's planned stake sale in oil-to-chemical business to Saudi Aramco for an asking of USD 15 billion has not progressed as per original timelines due to COVID-19. "We value our two-decade relationship with Aramco and are committed to a long-term partnership," Ambani said at Reliance Industries' annual general meeting. He, however, did not say if the deal was on track or give a new timeline for its completion. "Deal with Saudi Aramco hasn't progressed per original timeline due to unforeseen situation in the energy market and COVID-19 situation," he said. Reliance will be spinning off the oil-to-chemical (O2C) business into a separate subsidiary "to facilitate multiple partnership opportunities," he said. "We expect to complete this process by early 2021," he said. Ambani in August last year had announced talks for sale of 20 per cent stake in the O2C business, which comprises of RIL's twin oil refineries at Jamnagar in Gujarat and petrochemical assets, to the world's largest oil exporter, Saudi Aramco. The deal was to be concluded by March 2020 but was delayed. "Reliance is working to complete the contours of a strategic partnership with Saudi Aramco," Ambani had said in the firm's latest annual report without giving timelines. The partnership with Aramco would give Jamnagar refineries "access to a wide portfolio of value-accretive crude grades and enhanced feedstock security for higher oil-to-chemicals conversion," he had said in the annual report. With a stake, Aramco would not just have a share in one of the world's best refineries and the largest integrated petrochemical complex but also access to one of the fastest-growing markets -- a ready-made market for 5 lakh barrels per day of its Arabian crude and offering a potentially bigger downstream role in future. Besides refineries and petrochemical plants, the O2C business also comprises 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 flagging KG-D6 block in the Bay of Bengal. Ambani said Reliance has concluded the sale of a 49 per cent stake in its fuel retailing venture to BP for Rs 7,629 crore. RIL's refineries are one of the most complex in the world, allowing it to earn a significant premium to the benchmark Singapore gross refining margin. Its petrochemical complexes rank among the biggest in the world, whose dependency on outside raw materials is minimal. RIL has leadership positions both in the domestic polymer and polyester markets. The O2C business will be carved out into a division where Aramco will have an economic interest. It will have its own management and accounts just like the conglomerate's digital arm, Jio Platforms. RIL had organised all its digital businesses including Reliance Jio that has 388 million telecom subscribers, into Jio Platforms. It has sold 32.84 per cent stake in Jio Platforms Ltd - the unit that houses India's youngest but largest telecom firm Jio Infocomm and apps. In total, Jio has raised Rs 1,52,055.45 crore. RIL was to receive the proceeds from the Aramco stake sale in three stages - 50 per cent on closing, another 25 per cent after one year of closing and the balance 25 per cent in the following year. ANZ ANZ BAL BAL

Deal with Saudi Aramco not progressed as per timelines: Ambani

<ul><li>Billionaire <keyword id="3820" type="PERSON" weightage="20" keywordseo="Mukesh-Ambani">Mukesh Ambani</keyword> has accelerated the timeframe for wiping out ₹1.61 lakh crore of net debt at his <keyword id="6355199" type="COMPANY" weightage="20" keywordseo="reliance-industries">Reliance Industries</keyword> by bringing in strategic investors in key businesses as well as committing more equity.</li><li>Ambani, chairman and managing director of <keyword id="6487" type="DOMAIN" weightage="20" keywordseo="Reliance-Industries-Ltd">Reliance Industries Ltd</keyword> (RIL), had in August last year set a target of March 2021 to make the oil-to-telecom conglomerate net debt-free. But thanks to a USD 5.7 billion (Rs 43,547 crore) deal with Facebook, a Rs 53,125 crore rights issue and more stake sale to companies such as <keyword id="152170" type="COMPANY" weightage="20" keywordseo="Saudi-Aramco">Saudi Aramco</keyword>, the target is likely to be achieved by December. </li><li>In an investor and media call post announcement of the company's fourth-quarter earnings, RIL's Joint Chief Financial Officer <keyword id="2180080" type="PERSON" weightage="20" keywordseo="Srikanth-Venkatachari">Srikanth Venkatachari</keyword> said, "The zero net debt target will be achieved within the 2020 calendar year." </li></ul> Billionaire Mukesh Ambani has accelerated the timeframe for wiping out ₹1.61 lakh crore of net debt at his Reliance Industries by bringing in strategic investors in key businesses as well as committing more equity. Ambani, chairman and managing director of Reliance Industries Ltd (RIL), had in August last year set a target of March 2021 to make the oil-to-telecom conglomerate net debt-free. But thanks to a USD 5.7 billion (Rs 43,547 crore) deal with Facebook, a Rs 53,125 crore rights issue and more stake sale to companies such as Saudi Aramco, the target is likely to be achieved by December. In an investor and media call post announcement of the company's fourth-quarter earnings, RIL's Joint Chief Financial Officer Srikanth Venkatachari said, "The zero net debt target will be achieved within the 2020 calendar year." Since the August announcement, Ambani has sold a 9.99 per cent stake in the digital platform that houses India's youngest but biggest mobile operator to Facebook, decided to hive out Reliance's oil and petrochemicals business into a separate entity to help a proposed stake sale to Saudi Arabian Oil Co (Saudi Aramco), and pledged to make up for any shortfall in the rights issue. The company expects to complete a capital raising programme totalling Rs 1.04 lakh crore by June, Venkatachari said. This includes the rights offering of one share for every 15 shares held at Rs 1,257, a 14 per cent discount to the closing price for April 30. Also included is the Rs 43,574 crore coming from the Facebook buying stake in Jio Platforms and Rs 7,000 crore from sale of 49 per cent stake in fuel retailing venture to UK's BP plc. "In addition, Saudi Aramco due diligence is progressing well," he said without saying when the deal was expected to be closed. Reliance values its oil-to-chemical business, which includes its twin refineries at Jamnagar in Gujarat, petrochemical assets, and 51 per cent stake in auto fuel and aviation fuel retailing venture, at USD 75 billion. Saudi Aramco is in talks to buy a 20 per cent stake in this venture. Alongside announcing the zero net debt target, Ambani, 63, had in August also announced the potential sale of 20 per cent interest in the oil-to-chemical business to Aramco by March 2020. That deadline has been missed partly because of differences over the deal structure and partly due to talks stalling following the outbreak of <keyword id="1754604" type="PERSON" weightage="20" keywordseo="coronavirus">coronavirus</keyword> and the subsequent nationwide lockdown. At the end of March quarter, the company had an outstanding debt of Rs 336,294 crore and cash in hand of Rs 175,259 crore. After adjusting cash, the net debt came to Rs 161,035 crore. Of this debt, Rs 2,62,000 crore is on RIL books and Rs 23,000 crore is with Jio. At the concall, company officials said Jio Platforms will retain Rs 14,976 crore out of Rs 43,574 crore received from Facebook and use the remaining Rs 28,598 crore to settle the debt. The Facebook-Jio Platforms deal will close by the end of the current quarter. Also, the company said it has received interest from new potential global strategic and financial investors in taking a stake of similar size to Facebook's agreement in the Jio Platform. "In addition to the FB investment, the board was informed that RIL has received strong interest from other strategic and financial investors and is in good shape to announce a similar-sized investment in the coming months," the company had said in a statement on Thursday. "With a strong visibility to these equity infusions, the board was informed that RIL is set to achieve net-zero debt status ahead of its own aggressive timeline," it had said.

Mukesh Ambani aims to turn Reliance into zero net debt firm within 8 months

New Delhi, Jan 26 () Reliance Industries' partnership with Saudi Aramco for its USD 75 billion oil-to-chemicals business signals expansion rather than retreat as growth opportunities are expected to boost the petrochemical and refining vertical, market analyst firm Bernstein said.
 Billionaire Mukesh Ambani had in August last year announced initial agreements to sell a 20 per cent stake in the oil-to-chemical business to the Saudi national oil company. Also, a 49 per cent interest in fuel retailing business was sold to UK's BP plc for Rs 7,000 crore.
 "Reliance has pivoted away from energy to the new economy. But energy still accounts for 64 per cent of EBITDA. While RIL has divested stakes to BP and Aramco, we expect RIL to grow their petrochemical and refining business given the secular growth opportunities," it said in a report.
 Stating that India has significant secular expansion (that is, unaffected by short-term trends) ahead in refined products and petrochemicals, it said with the lowest demand per capita of 1.3 barrels per person, demand for refined products will grow by 5 million barrels per day over the next two decades, more than any other major market.
 Ethylene demand could grow ten-fold from 5kg per person per annum to 50-60kg pp/pa as consumer demand rises.
 "Reliance partnership with Aramco and BP signals expansion ahead rather than retreat," Bernstein said. "Aramco's investment is to secure market access and growth. While refining is a cash cow for the business, we believe that there are significant opportunities for petrochemical expansion ahead given demand growth and synergies with refining."
 Fuels marketing will be significantly expanded given the partnership with BP and plans for 5,500 stations, it said.
 Ambani had in August last year announced that the deal with Aramco will close by March 2020 but it is now expected to close within the current calendar year.
 Refining and petrochemicals are a cash cow for Reliance.
 "But to think of this as an ex-growth part of the business would be a mistake. In India, there is strong secular demand growth ahead. India is estimated to be the fastest growing refined fuels market over the next 20 years (faster than China) and will also one of the fastest growing markets for petrochemicals given the per capita demand which will grow with the GDP," it said.
 As part of the August deal, Saudi Aramco will supply 500,000 barrels per day of crude on a long-term basis to RIL's Jamnagar refinery complex (40 per cent of the refining capacity).
 "While bears will argue that Reliance is stepping away from energy to digital, we see this deal as an opportunity to expand the downstream business in India with a solid partnership. For Aramco, the deal provides direct access to what is widely expected to be the fastest growing refined oil product market over the next 20 years," it said. "For Reliance, it provides cash to fund expansion of their digital business and further expansion of downstream capacity with an experienced partner."
 Bernstein also said in the short term it remains cautious on chemical margins, but more positive on refining.
 On RIL's oil and gas exploration and production business, it said output will start to recover from this year with new developments.
 "Reliance and partners are developing 3 trillion cubic feet of reserves in the KG-D6 block which can add gross production of 1 billion cubic feet per day and raise segment EBITDA back to Rs 120 billion," it said.
 The turnaround is based on three new projects which Reliance and partner BP has launched in the KG basin. Notably the R-Series, Satellites and MU development which together contain 3 trillion cubic feet (TCF) of reserves which will underpin a recovery in production.
 But the refining segment remains one of the most important contributors to earnings for Reliance.
 The single largest asset within Reliance's refining and petrochemical business is the Jamnagar complex, which is one of the world's largest refining hubs.
 The Jamnagar complex was built in 2000 with a capacity of 0.67 million barrels per day. After upgrades in 2008, Jamnagar's crude processing capacity has more than doubled to 1.24 million bpd. Not only is Jamnagar the largest refinery hub in the world, it is also one of the most complex refineries globally, allowing RIL to process discounted heavier crude oil into oil products.
 "In comparison to global oil majors, Reliance has relatively less refining capacity at 1.24 million bpd versus peers at 2.62 million bpd. However, Reliance has one of the best positions to grow its capacity over time given India's structural growth in oil demand over the next 20 years," it said. "Moreover, Reliance has one of the most profitable refining business relative to peers owing to the higher complexity of Jamnagar. Whether Reliance will choose to expand its existing footprint is not clear, but the relationship with Aramco (assuming the deal goes through) means that there could be options for further expansion."
 In fuels marketing, Reliance has also formed a new JV with BP last year to create a world-class fuel retailing network in India. Over the next 20 years, India is likely to be the fastest growing fuels market. The new JV company will assume ownership of RIL's existing fuel retail network and aviation fuel business.
 Under the new partnership, RIL will hold 51 per cent of the new JV company and BP will hold the remaining 49 per cent. The JV has plans to rapidly grow the fuel retail distribution network in India over the next 5 years. RIL currently has 1,400 sites across India including contribution of USD 1.9 billion per annum in revenue from owned petro retail outlets.
 The JV plans to expand this to 5,500 sites over the next 5 years, which represents 800 additional sites per year.
 "For BP, the JV gives them access to the fastest growing refined fuels market. It also allows BP to tap into convenience non-fuel retail in India which is growing rapidly. For Reliance, the transaction provides funding and enables them to tap into BP's extensive fuels marketing experience," it added. ANZ ABM

Reliance's partnership with Saudi Aramco not a retreat from energy business: Report

New Delhi, Jun 23 () Oil-to-telecom conglomerate Reliance Industries Ltd (RIL) on Tuesday said it is working to complete contours of a USD 15-billion deal with Saudi Aramco but did not give a timeline for its completion. Richest Indian Mukesh Ambani in August last year announced talks for sale of 20 per cent stake in the oil-to-chemical (O2C) business, which comprises its twin oil refineries at Jamnagar in Gujarat and petrochemical assets, to the world's largest oil exporter. The deal was to be concluded by March 2020 but has been delayed. "Reliance is working to complete the contours of a strategic partnership with Saudi Aramco," Ambani said in the firm's latest annual report without giving timelines. The partnership with Aramco would give Jamnagar refineries "access to a wide portfolio of value-accretive crude grades and enhanced feedstock security for a higher oil-to-chemicals conversion," he said. Reliance executed on the next phase of its growth journey in 2019-20, forging transformative partnerships across businesses. "Reliance and Aramco share a common outlook and vision on the evolution of the business in the future with emphasis on higher oil-to-chemicals conversion," the firm said in the annual report. Also, the firm said it has formed a 51:49 joint venture with BP plc of the UK for automobile and aviation fuel business in India. With a stake, Aramco would not just have a stake in one of the world's best refineries and the largest integrated petrochemical complex but also access to one of the fastest-growing markets -- a ready-made market for 5 lakh barrels per day of its Arabian crude and offering a potentially bigger downstream role in future. Besides refineries and petrochemical plants, the O2C business also comprises 51 per cent stake in the fuel retailing business. It, however, does not include the upstream oil- and gas-producing assets such as the flagging KG-D6 block in the Bay of Bengal. RIL's refineries are one of the most complex in the world, allowing it to earn a significant premium to the benchmark Singapore gross refining margin. Its petrochemical complexes rank among the biggest in the world, whose dependency on outside raw materials is minimal. RIL has leadership positions both in the domestic polymer and polyester markets. ANZ HRS

Working to complete contours of Saudi Aramco deal: Mukesh Ambani

<ul><li><keyword id="6484187" type="General" weightage="20" keywordseo="ril" source="Orion">RIL</keyword> decided to 're-evaluate' Saudi Aramco's $15 billion investment in its O2C arm. </li><li> The current application with the NCLT for segregating the O2C business from RIL is being withdrawn.</li><li>RIL shall continue to be Saudi Aramco's preferred partner for investments in the private sector in India </li></ul><keyword id="10926" type="General" weightage="20" keywordseo="reliance" source="Orion">Reliance</keyword> Industries Limited (RIL) and Saudi Aramco have mutually agreed to re-evaluate the proposed investment of the latter in RIL's 'O2C' (Oil to Chemical). Consequently, the current application with the NCLT (National Company Law Tribunal) for segregating the O2C business from RIL is being withdrawn. In August 2019, both the companies had signed a non-binding Letter of Intent for a potential 20 per cent stake acquisition by Saudi Aramco in the O2C business of RIL. "Over the past two years, both the teams made significant efforts in the process of due diligence, despite Covid restrictions. This has been possible due to the mutual respect and long-standing relationship between the two organisations," RIL said in a statement on Friday. "Reliance recently unveiled its plans for the 'New Energy &amp; Materials' businesses by announcing the development of the Dhirubhai Ambani Green Energy Giga Complex at Jamnagar. It will be among the largest integrated renewable energy manufacturing facilities in the world," it added. Jamnagar, which accounts for a major part of the O2C assets, is envisaged to be the centre for Reliance's new businesses of 'Renewable Energy &amp; New Materials', supporting the net-zero commitment. "Due to the evolving nature of Reliance's business portfolio, Reliance and Saudi Aramco have mutually determined that it would be beneficial for both parties to re-evaluate the proposed investment in O2C business in light of the changed context. Consequently, the current application with NCLT for segregating the O2C business from RIL is being withdrawn," the statement said. "The deep engagement over the last two years has given both Reliance and Saudi Aramco a greater understanding of each other, providing a platform for broader areas of cooperation. Saudi Aramco and Reliance are deeply committed to create a win-win partnership and will make future disclosures as appropriate," it added. According to the statement, RIL shall continue to be Saudi Aramco's preferred partner for investments in the private sector in India and will collaborate with Saudi Aramco &amp; SABIC for investments in Saudi Arabia. "Saudi Aramco and RIL have a very deep, strong and mutually beneficial relationship, which has been developed and nurtured by both the companies over the last 25 years. Both are committed to collaborate and work towards strengthening the relationship further in the years ahead," the statement said. SEE ALSO <a href="https://www.businessinsider.in/thelife/news/tesla-hit-with-new-sexual-harassment-lawsuit-alleging-the-company-operates-like-a-frat-house/articleshow/87808968.cms" data-type="tilCustomLink">Tesla hit with new sexual harassment lawsuit alleging the company operates like a 'frat house'</a> <a href="https://www.businessinsider.in/investment/news/binances-ceo-is-buying-his-1st-home-in-crypto-friendly-dubai-and-confirms-its-us-affiliate-will-close-a-multi-million-dollar-funding-round-soon/articleshow/87807571.cms" data-type="tilCustomLink">Binance's CEO is buying his 1st home in crypto-friendly Dubai and confirms its US affiliate will close a multi-million dollar funding round soon</a> <a href="https://www.businessinsider.in/politics/world/news/kamala-harris-will-become-the-first-woman-to-have-control-over-us-nuclear-weapons-but-only-briefly/articleshow/87806057.cms" data-type="tilCustomLink">Kamala Harris became the first woman to have control over US nuclear weapons, but only briefly</a>

Reliance's $15 billion deal with Saudi Aramco has been called off

After effectively turning debt free, <keyword id="6355199" type="COMPANY" weightage="20" keywordseo="reliance-industries">Reliance Industries</keyword> (RIL) may see IPOs of its flourishing telecom arm Jio and retail business segment, unlocking additional shareholder value, Bernstein Research said in a report on Wednesday. RIL has raised USD 22.3 billion capital market through the sale of 24.7 per cent stake in <keyword id="9093411" type="COMPANY" weightage="20" keywordseo="Jio-Platforms">Jio Platforms</keyword> and USD 7 billion equity-raise. "Following the rights issues and 24.7 per cent sell down in Jio, RIL is now effectively debt free. We expect a break-up of the company in the next three-four years through the IPO of Jio and retail business segment which should further unlock shareholder value," the analyst said. Looking at the balance sheet, Reliance has significantly improved its financial position following the transactions, it said, adding that the net debt to equity will fall significantly from 0.51x in FY20 to 0.06x in FY21 which is the lowest in almost a decade. Given the USD 15 billion <keyword id="8360798" type="UNKNOWN" weightage="20" keywordseo="aramco-deal">Aramco deal</keyword> and free cash flow outlook in the next several years, net debt to equity could continue to fall beyond FY21, it said. Reliance is in talks with Aramco to sell a fifth of its USD 75 billion oil-to-chemical business. "The key question is what will Reliance do with the significant cash position? We think the priority for now is to reduce other liabilities on the balance sheet such as deferred payments and provisions which total in excess of Rs 50,000 crore," it said. Given the company's expansion into internet and retail, more investments including mergers and acquisitions seem highly likely, the brokerage said adding that refining and petchem could also see expansion with the Aramco partnership. "Overall, we expect RIL will continue to invest in growth over returning cash to shareholders," it said. While earnings will soften in FY21 due to COVID-19, the brokerage believed that RIL is at the start of a secular growth period driven by telecom, retail and new economy related business. "We estimate EBITDA for FY21 of Rs 86,000 crore, which is almost double what it was a few years ago," it said. "On our estimates, we believe that EBITDA can double again through to FY25, mainly through the growth in Jio and new business, while the energy related business will be relatively flat (assuming the 20 per cent divestment to Aramco)." It raised its price target for RIL from Rs 1,720 to Rs 1,870. "The higher valuation comes primarily from retail, media and other marketable investments on the balance sheet."

Reliance could soon be ready with the IPOs of Jio and its retail business

New Delhi, May 31 () Riding on the Rs 1.3 lakh crore in aggregate fund raising in the last few weeks, Reliance Industries is expected to repay its entire reported net debt even if the Saudi Aramco deal is delayed, a brokerage report said. The company, controlled by billionaire Mukesh Ambani, has sold minority stakes in its digital arm to Facebook and private equity firms such as Silver Lake, Vista Equity, KKR and General Atlantic to raise a cumulative Rs 78,562 crore. Also, the company is raising Rs 53,125 crore through a rights issue. "We analysed RIL's balance sheet following the recent deal-making. Having raised, on aggregate, Rs 1.3 lakh crore in equity over the past month, we expect the company to repay its entire reported net debt of Rs 1.6 lakh crore in 2020-21, even if the Aramco deal is delayed," Edelweiss said in a research report on the company. Adjusted net debt, however, at Rs 2.57 lakh crore is higher and would take longer to repay. "That said, we expect concerns on leverage to be gradually allayed as asset sales continue and tapering capex generates positive free cash flow (FCF)," it said. With telecom arm Jio's capital expenditure (capex) largely complete, RIL should generate FCF of more than Rs 20,000 crore in FY21 (same as FY20) despite weaker oil and gas earnings. "We expect RIL to monetise 20 per cent of Jio; this along with partial proceeds from the rights issue and sale of (49 per cent of) fuel retail (to BP for Rs 7,000 crore), not to mention FCF, would lead to cash proceeds of Rs 1.3 lakh crore, thereby putting the company on the path to zero net debt in FY21," the brokerage said. However, adjusted net debt (creditor capex plus spectrum liability) is much higher at Rs 2.57 lakh crore. "To repay this, RIL will need to tap into its massive divestment pipeline of oil-to-chemical (O2C) assets (Rs 1 lakh crore) and fibre InvIT (Rs 1.2 lakh crore). Progress on this front would, therefore, continue to allay market concerns around leverage," it noted. Even a 5 per cent stake sale of O2C assets to Saudi Aramco (versus talks of 20 per cent) can help fill the shortfall, it said. The Aramco deal was to conclude by March 2020 but it is now expected within 2020 calendar year. When RIL announced its rights issue of Rs 53,125 crore on April 30, it was perceived as part of the company's aim to become net debt-free by March 2021. But with shareholders needing to pay only 25 per cent of the rights issue price on application, the proceeds will be Rs 13,281 crore in total and cannot be a major source of debt reduction plan. The remaining portion of the rights issue price is to be paid next fiscal. With major refining and telecom projects achieving completion, capex in FY20 slid to Rs 76,000 crore from the high of about Rs 1 lakh crore in FY19. "We expect capex to decline further to Rs 46,000 crore in FY21, offsetting lower operating cash flow from oil and gas," it said. As a result, FCF is expected to remain steady at over Rs 20,000 crore in FY21. "Self sufficiency in operations has the added advantage of freeing up asset sales for deleveraging," it said. ANZ ABM ABM

Reliance on track to achieve zero net debt: Report

<keyword id="6355199" type="ORGANIZATION" weightage="20" keywordseo="reliance-industries">Reliance Industries</keyword> Ltd (RIL), India's largest company, on Thursday said its board has approved hiving off its USD 75 billion worth oil-to-chemicals business into a separate division to enable the sale of 20 per cent stake in the unit to Saudi national oil company Aramco. The hiving off will be subject to the approval of the National Company Law Tribunal. After the approval, the oil-to-chemical (O2C) business will become a separate vertical with independent balance sheet just like the conglomerate's digital arm, Jio Platforms. RIL had organised all its digital businesses including Reliance Jio that has 388 million telecom subscribers, into Jio Platforms. It last week agreed to sell a 9.99 per cent stake in Jio Platforms to <keyword id="319320" type="COMPANY" weightage="20" keywordseo="Facebook-Inc">Facebook Inc</keyword> for USD 5.7 billion. RIL Board "approved a Scheme of Arrangement for transfer of O2C Undertaking of the company to <keyword id="9147221" type="COMPANY" weightage="20" keywordseo="reliance-o2c-ltd">Reliance O2C Ltd</keyword> as a going concern on slump sale basis for a lump sum consideration equal to the income tax net worth of the O2C Undertaking as on the appointed date of the Scheme," it said in its fourth-quarter earnings statement. O2C undertaking of the company comprises entire oil-to-chemicals business of the company consisting of refining, petrochemicals, fuel retail and aviation fuel (majority interest only) and bulk wholesale marketing businesses together with its assets and liabilities. "The scheme is subject to necessary statutory/regulatory approvals under applicable laws including approval of National Company Law Tribunal," it added. In August last year, RIL head <keyword id="3820" type="PERSON" weightage="20" keywordseo="Mukesh-Ambani">Mukesh Ambani</keyword> had announced initial agreements to sell a 20 per cent stake in the oil-to-chemical business to <keyword id="152170" type="COMPANY" weightage="20" keywordseo="Saudi-Aramco">Saudi Aramco</keyword> for an asking of USD 15 billion. The deal covers all of Reliance's refining and petrochemicals assets as well as the remainder of stake the firm has in fuel retailing business after selling 49 per cent to BP Plc of UK for Rs 7,000 crore. The deal, which valued the oil-to-chemical business at USD 75 billion, was to close by March 2020 but it is now expected to close within the current calendar year. Reliance has pivoted away from energy to the new economy. But refining and petrochemicals are cash cows for Reliance and still account for the bulk of its EBITDA. As part of the August deal, Saudi Aramco will supply 500,000 barrels per day (25 million tonnes a year) of crude on a long-term basis to RIL's Jamnagar refinery complex (more than a third of the 1.36 million bpd refining capacity). The deals give Aramco and BP access to the fastest-growing refined fuels market in the world. Market analyst firm Bernstein in a recent report had stated that it expects RIL to grow their petrochemical and refining business given the secular growth opportunities. "While bears will argue that Reliance is stepping away from energy to digital, we see this deal as an opportunity to expand the downstream business in India with a solid partnership. For Aramco, the deal provides direct access to what is widely expected to be the fastest-growing refined oil product market over the next 20 years," it said. "For Reliance, it provides cash to fund the expansion of their digital business and further expansion of downstream capacity with an experienced partner." While talks with Aramco continue, the BP deal has been finalised. Reliance's existing 1,400-odd petrol pumps, as well as 31 aviation fuel stations, will be transferred to the new joint venture where BP will hold 49 per cent equity stake. Reliance will hold the balance 51 per cent in the entity, which aims to expand the retail network to 5,500 petrol pumps in the next five years. This is the third joint venture between Reliance and BP since 2011. BP had in 2011 bought 30 per cent stake in 21 oil and gas exploration and production blocks of Reliance for USD 7.2 billion. At that time, another 50:50 joint venture, <keyword id="838593" type="COMPANY" weightage="20" keywordseo="India-Gas-Solutions">India Gas Solutions</keyword>, was set up for sourcing and marketing gas in India. The country currently has 69,109 petrol pumps, with public sector retailers owning 61,811. PSU retailers have plans to double this network and have already started appointing dealers. Russia's Rosneft-backed Nayara Energy, formerly Essar Oil, has 5,702 petrol pumps and has plans to scale them up to more than 7,000 in two-three years. Royal Dutch Shell has 189 outlets and is slated to add 150-200 more petrol pumps. BP had in 2016 received a licence from the government to set up 3,500 petrol pumps in India. French energy giant Total SA too is keen on entering the Indian retail market and has tied up with Adani Group for the same. The Saudi national oil company, along with its partner UAE's Abu Dabhi National Oil Co (ADNOC) has taken a 50 per cent stake in a planned USD 60-billion mega refinery-cum-petrochemical complex in Maharashtra by state-owned oil companies, and has a bullish outlook on India's energy demand and is keen on investing here. Reliance operates two refineries in Jamnagar, Gujarat, with a total capacity of 68.2 million tonnes per annum. It plans to expand its only-for-exports special economic zone (SEZ) refining capacity to just over 41 million tonnes from the current 35.2 million tonnes. Saudi Arabia, on the other hand, is keen to get a foothold in the world's fastest-growing fuel market to get a captive customer for the crude oil it produces. Crude oil is the basic raw material for the manufacturing of petrochemicals. Saudi Aramco is also keen on retailing fuel in India. A refinery in India can also be a base for it to export fuel to deficit countries in Europe and the Americas. India has a refining capacity of 249.9 million tonnes, which exceeded the demand of 213.7 million tonnes. See also: <a href="https://www.businessinsider.in/business/corporates/news/ril-rights-issue-ratio-pricing-and-value/articleshow/75474592.cms">Mukesh Ambani offers Reliance Industries shareholders 1 new share for every 15 held⁠— at a price 14% below market value</a> <a href="https://www.businessinsider.in/business/news/reliance-retails-operating-profit-grows-nearly-20-in-the-latest-fourth-quarter/articleshow/75474722.cms">Reliance Retail’s operating profit grows nearly 20% in the latest fourth quarter⁠⁠</a> <a href="https://www.businessinsider.in/business/news/tech-mahindras-net-profits-see-a-massive-32-drop-even-as-its-digital-business-is-treading-water-amidst-the-covid-19-crisis/articleshow/75472198.cms">Tech Mahindra’s net profits see a massive 32% drop even as its digital business is treading water amidst the COVID-19 crisis</a>

Reliance to hive off $75 billion oil-to-chemicals business into separate unit for sale to Aramco

New Delhi, Apr 28 () Billionaire Mukesh Ambani's Reliance Industries Ltd (RIL) will on Thursday consider a rights issue - the first such issue in nearly three decades - as it steps up efforts to pare debt. The Board of the country's largest company will meet on April 30 to consider and approve audited financial results of the firm for the quarter and year ended March 31 as also to recommend dividend, RIL said in a regulatory filing. It would also "consider a proposal to issue equity shares to existing shareholders on Rights basis, as may be permitted under applicable law, subject to such regulatory/statutory approvals, as may be required," the company said without giving details. The move comes within days of RIL agreeing to sell 9.99 per cent stake in its digital platform to Facebook Inc for USD 5.7 billion or Rs 43,574 crore. Ambani had in August last year unveiled plans to cut debt to zero by 2021. As part of this plan, RIL has been seeking strategic partnerships across its businesses while targeting to deleverage the balance sheet. At the end of December quarter, RIL had an outstanding debt of Rs 3,06,851 crore. It also had cash in hand of Rs 1,53,719 crore, bringing the net debt position to Rs 1,53,132 crore. Analysts expect dilution of at least 5 per cent through the rights issue. In other words, each shareholder will be entitled to apply for five new shares for every 100 shares held. This will help RIL raise about Rs 40,000 crore, assuming some discount to the current trading price. Typically, cash-strapped companies use rights issues to raise money when they really need it. In these rights offerings, companies grant shareholders the right, but not the obligation, to buy new shares at a discount to the current trading price. The last time RIL tapped the public for funds was in 1991 when it had issued convertible debentures. The debentures were subsequently converted into equity shares at Rs 55 apiece. As part of its balancesheet deleveraging plans, RIL is talking to Saudi Aramco for selling a fifth of its oil-to-chemicals business for an asking of USD 15 billion and has sold half of its fuel retail venture to BP Plc for Rs 7,000 crore and telecommunication tower business to Brookfield for Rs 25,200 crore. But the crash in oil prices has created uncertainty over the timeline for the completion of the Aramco deal. On August 12, 2019, RIL announced that it has signed a non-binding letter of intent to sell a 20 per cent stake in its oil-to-chemical (O2C) business to Saudi Aramco. The O2C business, which has an enterprise valuation of USD 75 billion, includes RIL's refining and petrochemical divisions, and RIL's 51 per cent stake in its fuel marketing business. The company had sold a 49 per cent stake in its fuel marketing business in India to BP Plc for USD 1 billion. In July 2019, RIL announced the sale of its telecommunications tower business - which was already transferred to the investment infrastructure trust, InvIT, to Brookfield Asset Management Inc for Rs 25,200 crore. Together, proceeds from these transactions will result in a reduction in RIL's net debt. ANZ ANZ ANUANU

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