RIL's O2C hive-off aimed at attracting marque investors

Mumbai: Reliance Industries (RIL) has moved a step closer to its goal of value unlocking its oil-to-chemicals business with the release of a detailed plan to hive off the business into a separate entity, Reliance O2C.The move may help the Mukesh Ambani-led conglomerate attract global investments in the business, after receiving big-ticket investment in its digital arm Jio.As per the detailed plan released on Sunday, Reliance O2C would include oil refinery, petrochemical and manufacturing assets, and bulk and retail fuel marketing businesses. It will house Reliance Industries’ 51% interest in retail fuel joint venture with BP, and will also include some of the related international subsidiaries, but not the upstream business of RIL.RIL’s board had in April approved an arrangement for transfer of the business to Reliance O2C as a going concern on slump sale basis. “The nature of risk and returns involved in the O2C business are distinct from those of the other businesses of RIL and the O2C business attracts a distinct set of investors and strategic partners,” the company said, explaining the rationale behind the move in its scheme of arrangement filing. “RIL has been exploring various opportunities to bring in strategic/other investors in the O2C business,” it said.Last year, Reliance Industries had said it is in talks to sell a 20% stake in the O2C business to Saudi Aramco for $15 billion. While the deal has been delayed and speculations are rife that the latter may pull out, both companies have maintained that the talks are still on. In July, RIL chairman Mukesh Ambani told shareholders that with the fundraising done earlier in the year, the company’s equity requirements have been met but it is still exploring value unlocking in the O2C business and committed to a long-term partnership with Saudi Aramco.78004263The O2C division will not include Reliance Ethane Holding, Reliance Gas Pipelines, Gujarat Chemical Port, Reliance Corporate IT Park, Reliance Industrial Infrastructure, Reliance Europe, Reliance Industries (Middle East) DMCC, and RIL’s textiles business, exploration and production assets, among other assets.HSBC’s research arm in a recent report said, “We continue to like its business, balance sheet and believe each of its three core businesses — O2C, retail, and digital services — has become self-sustaining and cash-generating, with retail and digital services on high growth. The stock has outperformed the Nifty 50 by 22% over the past three months. We believe this is largely driven by significant deleveraging, new investors, and partners in the digital services business, thus setting a new benchmark valuation and unlocking value.”

from Economic Times https://bit.ly/3jZB5ds
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