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Home >Companies >News >RIL's O2C business spinoff will facilitate a potential stake sale to Aramco: Moody's

Reliance Industries Ltd (RIL) on M announced that it has initiated the process to move its oil-to-chemicals (O2C) business into an independent subsidiary and will retain 100 per cent management control.

All of refining, marketing and petrochemical assets will be transferred to the O2C subsidiary, it said in regulatory filings at stock exchanges late on Monday.

Oil-to-chemicals contributed more than 60% in the last financial year to the group’s revenue that’s been lately pivoting toward consumer businesses such as technology and retail. Splitting the business will make it easier for Ambani to bring in investors and help expedite a proposed stake sale to Saudi Arabian Oil Co.

“With this reorganization, RIL will have four growth engines- digital, retail, new materials and new energy," Morgan Stanley analyst Mayank Maheshwari wrote in a Feb. 23 note.

"RIL’s separation of its O2C business to a subsidiary will facilitate a potential stake sale to Aramco, possibly enabling a further reduction in its net debt," said Sweta Patodia, an analyst at Moody’s Investors Service.

“Until the stake sale is completed, there will be no subordination risk for RIL’s lenders, as the company will continue to have full access to the O2C business’ cash flows, given its full ownership of and no external debt at the new subsidiary," she added further.

The move will facilitate value creation through strategic partnerships, including the deal with Saudi Aramco, and attract dedicated pools of investor capital.

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