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April 29, 2021updated 27 Oct 2021 11:14am

Saudi Aramco revives stake acquisition talks for Reliance’s O2C unit

Saudi Aramco has reportedly revived negotiations to acquire 20% stake in India-based Reliance Industries Limited's (RIL) oil refining and petrochemical unit through a mix of cash-and-share deal.

By Archana Rani

Saudi Aramco has reportedly revived negotiations to acquire 20% stake in India-based Reliance Industries Limited’s (RIL) oil refining and petrochemical unit through a mix of cash-and-share deal.

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The oil-to-chemicals (O2C) unit comprises two oil refineries at Jamnagar in Gujarat, as well as petrochemical assets.

Citing three people familiar with the matter, the Financial Times reported that the talks were held in the recent weeks to finalise the stake acquisition deal, which was first announced in 2019.

Estimated to be $15bn in 2019, this deal was expected to be finalised in 2020 but was delayed due to Covid-19 and its impact on the Saudi firm’s finances.

Aramco is considering paying for the deal initially with its shares and then through staggered cash payments over several years.

Details on the proportion of shares and cash, as well as the terms, are yet to be finalised.

This stake acquisition will enable Aramco to gain a ready 500,000-barrels-per-day market in India.

The O2C business has been valued at $75bn by Reliance in 2019.

Saudi Aramco also owns an equity stake in an O2C project at Zhejiang in China, along with a crude supply agreement.

This week media reports emerged that Saudi Arabia was in talks with an undisclosed energy company to sell its 1% stake in Saudi Aramco.

The deal may be executed in the next two years.

 

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IPO activity all but stopped in 2020, as the investment community grew wary of the effects of COVID-19 on economies. No matter how deserving a business was of flotation, momentum was halted by concerns of when a ‘new normal’ of working patterns and trade would set in. Recently, sentiment has changed. Flotations picked up again during the second half of 2021, and now in 2022 the mood is decidedly optimistic. Business leaders have their eyes on fast rebounding economies, buoyant market indices and the opportunity once again to take their businesses public. As a result, global IPOs are expected to hit back this year. With GlobalData’s new whitepaper, ‘IPOs in Consumer and Retail: 5 must-include elements for your prospectus industry report’, you can explore exactly what is needed in the essential literature. GlobalData’s focus lies in the critical areas to get right:
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