Saudi Aramco Chairman and Governor of the Kingdom’s Public Investment Fund (PIF) Yasir Al-Rumayyan could be inducted into the board of directors of Reliance Industries, the precursor to a $ 15 billion deal, according to reports . The announcement of the induction of Al-Rumayyan to the board of directors of RIL or to the board of directors of the new unit for the transformation of petroleum into chemicals (O2C) could be made at the annual meeting of shareholders of the company on June 24.
“RIL’s Annual General Meeting (AGM) has always been a closely watched event (previously 3,000 shareholders attended in physical format and last year saw 300,000 simultaneous viewers of the virtual AGM in 42 countries and 468 cities), given that it was one of the top 3 companies by market capitalization in India, has a large free float and a large public participation (more than 3 million non-institutional shareholders) ”, a brokerage firm HSBC Global Research said in a report.
And expectations are already set for the AGM.
“Over the past year, new investors have joined RIL’s digital and retail operations 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 give direction to these companies and announce products, ”he said, adding that reports suggest he will likely announce a new smartphone in partnership with Google and its pricing. “There is also expected an update on the Saudi Aramco deal and speculation that the Saudi Aramco chairman may join RIL’s board of directors,” he said.
RIL and Saudi Aramco did not respond to emails sent for comment. An email sent to PIF also went unanswered. PIF has already taken a minority stake in Reliance Retail and Jio.
Billionaire Mukesh Ambani announced in August 2019 talks to sell a 20% stake in the oil-to-chemicals (O2C) business, which includes its twin oil refineries in Jamnagar, Gujarat. and petrochemical assets, to the world’s largest oil exporter. .
The deal was due to be concluded by March 2020, but was delayed for reasons undisclosed by the two companies.
Talks resumed this year and the two are said to be discussing a cash and stock deal – Aramco initially paying for the stake with its shares, then staggering the cash payments over several years.
In a separate report, BofA Securities said that RIL’s annual AGM has turned into a key event where Chairman Mukesh Ambani provides more information on the outlook for major business divisions.
“Historically, we’ve seen major announcements on phones, pricing, sales of stakes, etc.,” he said.
“We are waiting for an update on the features of the Jio-Google phone (like 5G), potentially on the price and the timeline,” he said.
“Clarity on JioMart / other e-commerce companies with JioMart-WhatsApp integration” is also expected.
Reports suggest that “RIL may announce the appointment of Yasir Al-Rumayyan, chairman of Saudi Aramco and governor of the kingdom’s public investment fund, to its board of directors at the AGM,” he said. . “RIL could introduce a new affordable laptop to meet the massive demand for work from home machines.”
In addition to refineries and petrochemical plants, the O2C business also includes a 51% stake in the fuel retail business. However, it does not include upstream oil and gas production assets such as the endangered KG-D6 block in the Bay of Bengal. RIL had in 2019 put $ 75 billion as the value of O2C activity after signing a non-binding letter of intent with Saudi Aramco.
The company had recently announced the creation of the O2C activity as a separate subsidiary to support strategic partnerships and new investors to accelerate its new energy and material plans. The digital business is already owned by a subsidiary Jio Platforms and Reliance Retail owns the offline and online retail business.
Aramco buying 20 percent of the O2C business would allow Reliance to grow financially while securing a foothold in the highly competitive omnichannel retail business. 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 ready-made market for 5 lakh barrels per day of its Arab crude and offering a potentially larger downstream role going forward.
RIL’s refineries are one of the most complex in the world, allowing it to earn a significant premium over Singapore’s benchmark refining gross margin. Its petrochemical complexes are among the largest in the world, with minimal dependence on external raw materials. It occupies leading positions in both the domestic polymer and polyesters markets.