Aramco deal could provide significant financial muscle to RIL: HSBC

Foreign brokerage firm HSBC Said that scepticism may be rising that Saudi Aramco’s proposed investment for a 20% stake in Reliance Industries for $15 billion will not materialise because of recent capital raising decisions and weak oil prices, said HSBC.

Reliance has recently said that due diligence for the deal is being done and has filed for a seperation of its oil and chemicals business into a wholly-owned subsidiary.

HSBC said the Aramco deal could provide significant financial muscle to Reliance Industries.

Besides creating a benchmark valuation for RIL’s OTC business of $75 billion, the deal would provide $15 billionin additional cash flow, shifting Reliance Industries into a strong net cash position from net debt, said HSBC. Once money from the rest of its announced transactions flows into RIL; that combined with its treasury shares, RIL will have $34 billion in assets that should allow it to expand in the competitive omni-channel retail space, said HSBC.

The brokerage said it sees enough reasons for Aramco to acquire stake in RIL.

Aramco would not just have a stake in one of the world’s best refineries and largest integrated petrochemical complex but also access to one of the fastest-growing markets, it said.

ET Energy World
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