The president of Saudi Aramco and governor of the Kingdom’s wealth fund’s Public Investment Fund, Yasir Al-Rumayyan, may be included on the board of Reliance Industries Ltd, a precursor to a $ 15 billion deal, according to reports.
An announcement of Al-Rumayyan’s induction into RIL’s board of directors or the board of the newly sculpted petroleum-to-chemical (O2C) unit may come as early as the company’s annual shareholders meeting on June 24. .
“RIL’s Annual General Meeting (AGM) has historically been a highly watched event (previously 3,000 shareholders attended when it was held in physical format and last year it had 300,000 simultaneous viewers of the virtual AGM in 42 countries and 468 cities) since it has been one of the top 3 companies by market capitalization in India, has large free float and large public participation (over 3 million non-institutional shareholders), “brokerage HSBC Global Research said in a report.
And expectations have already been created for the AGM.
“Over the last year, new investors have joined RIL’s retail and digital business at the subsidiary level and RIL has formed new partnerships with global players such as Google, Facebook, Microsoft, Qualcomm, etc. Investors now expect RIL to provide direction to these businesses and announce product innovations, “he said, adding reports suggesting that he will likely announce a new smartphone associated with Google and its price.
“Some update on the Saudi Aramco deal is also expected and there is speculation that the president of Saudi Aramco could join RIL’s board of directors,” he said.
Both RIL and Saudi Aramco did not respond to emails sent for comment. An email sent to PIF also went unanswered. PIF has already acquired a minority stake in Reliance Retail and Jio.
Billionaire Mukesh Ambani had announced talks for the sale of a 20 percent stake in the Oil to Chemicals (O2C) business in August 2019, which comprises its twin oil refineries at Jamnagar in Gujarat and petrochemical assets, at the largest. world oil exporter. .
The deal was due to conclude in March 2020, but has been delayed for reasons not disclosed by either company.
The talks have been reignited this year and the two are reportedly discussing a cash-and-shares deal: Aramco paid for the stake with its shares initially and then scaled the cash payments over several years.
In a separate report, BofA Securities said that RIL’s annual general meeting each year has become a key event in which Chairman Mukesh Ambani provides more insight into the outlook for key business divisions.
“Historically we have seen major announcements about phones, rates, share sales, etc.,” he said. The agreement to sell interest in the O2C business to Aramco was also announced at RIL AGM in 2019.
“We are expecting an update on the Jio-Google phone features (such as 5G), the potential price and the schedule,” he said. Also expected “clarity on JioMart / other online commerce businesses along with JioMart-WhatsApp integration”.
Reports suggest that “RIL may announce the appointment of Mr. Yasir Al-Rumayyan, chairman of Saudi Aramco and governor of the kingdom’s wealth fund Public Investment Fund, to its meeting during AGM,” he said. “RIL may introduce a new affordable laptop to take advantage of the massive demand for work from home machines.”
In addition to refineries and petrochemical plants, O2C’s business also comprises a 51 percent stake in the fuel retail business. However, it does not include upstream oil and gas producing assets such as the KG-D6 block in the Bay of Bengal.
RIL had in 2019 put USD 75 billion in value of the O2C business after signing a non-binding letter of intent with Saudi Aramco.
The firm had recently announced the separation of the O2C business as a separate subsidiary to support strategic partnerships and new investors in order to accelerate its new energy and materials plans. The digital business is already in the hands of a Jio Platforms subsidiary and Reliance Retail has the online and offline retail business.
Aramco’s purchase of 20 percent of the O2C business would allow Reliance to build financial muscle while carving out space in highly competitive omnichannel retail.
With a stake, Aramco would not only have a stake in one of the world’s best refineries and the largest integrated petrochemical complex. It has access to one of the fastest growing markets, a 5 lakh barrel-a-day pre-fab market for its Arabian crude, offering a larger potential role in the future.
RIL’s refineries are one of the most complex in the world, allowing it to earn a significant premium over Singapore’s benchmark gross refining margin. Its petrochemical complexes are among the largest in the world, whose dependence on external raw materials is minimal. It has leading positions in both the domestic polymer and polyester markets.
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