Reliance Industries Ltd.’s talks to sell a minority stake in its oil-to-chemical division to Saudi Aramco have been gathering pace in recent weeks, according to people familiar with the matter.
Aramco officials and bankers on the deal have been working at Reliance’s offices in Mumbai for due diligence this month, according to the people, who asked not to be identified as the information isn’t public. Both parties are trying to overcome differences over the deal’s structure, which had stalled the process last year, Bloomberg News previously reported.
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, one of the people said.
Shares of Reliance rose as much as 2.6 percent in Mumbai on Wednesday, their biggest advance in more than two weeks. The country’s benchmark S&P BSE Sensex Index climbed 0.8 percent.
Reliance in August valued its oil-to-chemicals division at $75 billion including debt, implying a $15 billion valuation for the 20 percent stake. If the deal closes at this value, it will be the largest transaction in India since Walmart Inc.’s $16 billion acquisition of a majority stake in Flipkart Online Services Pvt. For Aramco, the deal could be its biggest since agreeing to buy a majority stake in Saudi Basic Chemicals for $69 billion last year.
Ambani in August told shareholders that Reliance and Aramco had agreed to a non-binding deal for a 20 percent stake in the oil-to-chemical operations. But 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. A month later, Reliance’s joint chief financial officer V. Srikanth told reporters that the transaction isn’t expected to be completed by March.
Reliance has been selling assets from mobile-phone towers to a 49 percent stake in its fuel retail business to reduce leverage that’s risen over the past few years as it poured money into new sectors such as telecommunications. The Indian conglomerate’s debt stood at $43 billion at the end of December, according to its latest earnings statement.
Deliberations between Reliance and Aramco are ongoing and talks could still fall apart, the people said. A representative for Reliance declined to comment, while a representative for Aramco, formally known as Saudi Arabian Oil Co., didn’t immediately respond to requests for comment.