“Reinvigorating RIL”: Why Mukesh Ambani is diluting stake in his core businesses

When one of the world’s richest men goes for a significant stake dilution in his flagship business, there should be some real good reasons. And when that person is Mukesh Ambani, not quite known for selling businesses as for establishing and blistering them, it’s time to take note.

At the 42nd annual general meeting of shareholders in Mumbai on August 12, Ambani, chairman of Reliance Industries Limited (RIL), said the company will sell 20 per cent stake in its oil and petrochemicals business to Saudi Aramco for an enterprise value of $75 billion or around Rs 5.3 lakh crore. Saudi Aramco will also supply 500,000 barrels per day of crude oil on a long-term basis to RIL’s Jamnagar refinery. The 20 per cent stake sale is likely to fetch RIL $15 billion or around Rs 1 lakh crore.

Days before, RIL had said it will set up a fuel retailing joint venture with British oil major BP Plc to launch 5,500 retail outlets in five years. RIL will own 51 per cent stake in the JV and BP the remaining. The partnership will also market aviation turbine fuel to cater to India’s growing aviation industry. RIL will earn Rs 7,000 crore from the deal, Ambani said at the AGM.

In July, RIL had said that Canada’s Brookfield Infrastructure Partners L.P. and affiliates will invest Rs 25,215 crore in its telecom tower assets. These deals have come in quick succession this year, after a gap of over eight years. In 2011, RIL had sold 30 per cent stake in its oil and gas exploration and production business to BP for $7.2 billion (Rs 51,000 crore).

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