Stocks

RIL surges over 8% on Aramco deal

Bloomberg Mumbai | Updated on August 13, 2019 Published on August 13, 2019

Shares has risen as much as 8.8 per cent, the biggest intra-day gain since February 22, 2017.

 

Reliance Industries soared the most in more than two years after billionaire Mukesh Ambani revealed a plan to sell a stake to Aramco as part of efforts to pare debt that piled after racking up $76 billion in capital expenditure in the last five years.

The conglomerate aims to be a zero-net-debt company in 18 months, Asia’s richest man told shareholders Monday. Aiding that effort would be a proposed sale of 20% of Reliances oil-to-chemicals business to Saudi Arabian Oil Co. at an enterprise value of $75 billion. The company will also start preparing to list its retail and telecommunications units within five years, Ambani said.

Shares of Reliance jumped as much as 8.8% in Mumbai, the biggest intra-day gain since Feb. 22, 2017.

Read also: RIL-Aramco deal: A win-win for Reliance Industries

The tycoon is cleaning up the groups finances following years of spending on his wireless carrier, whose entry in 2016 with free calls and cheap data upended the industry and spurred a consolidation. The $50 billion plowed into the phone venture, mostly in debt, has raised concerns among analysts including at Credit Suisse Group AG that Reliance’s ballooning borrowings could weigh on growth. Ambani sought to allay those fears.

With these initiatives, I have no doubt that your company will have one of the strongest balance sheets in the world, he said. We will also evaluate value unlocking options for our real estate and financial investments.

The Aramco deal should be completed by March and is subject to due diligence, definitive agreements and regulatory and other approvals, Ambani said. He didn’t say how the deal would be structured.

Published on August 13, 2019
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.