Chevron to acquire 5 per cent of Reliance Petroleum for Rs1,320 crore

13 April 2006

US based oil major Chevron Corporation has agreed to pick up a 5 per cent stake in Reliance Petroleum (RPL), on the eve of its IPO. Chevron would acquire the stake from Reliance Industries Limited (RIL) at Rs60 per equity share for a total consideration of Rs1,320 crore or nearly $300 million.

The transaction has been routed through Chevron India Holdings, a Singapore based subsidiary of Chevron, which would acquire 22.5 crore equity shares of RPL.

After the stake sale to Chevron, RIL''s post-IPO holdings in RPL would come down to 75 per cent. Post IPO, 20 per cent of RPL would be held by institutional and retail investors.

The agreement between RIL and Chevron also provides for sale of an additional 24 per cent stake in RPL to Chevron in future. As and when this additional stake sale happens, Chevron''s stake in RPL would rise to 29 per cent and RIL''s stake would decline to 51 per cent.

Even if the additional stake acquisition is concluded at the same price of Rs60 per share, the total investment by Chevron would go up to Rs7,656 crore or more than $1.7 billion. It is likely that Chevron would pay a higher price depending on the future market price of RPL shares. In any case, this would be the single largest FDI flow into the country so far.

The agreement between RIL and Chevron also covers cooperation between the 2 companies in sourcing of crude oil and marketing of refined products for RPL''s proposed refinery. RPL is building a 27 million tonnes per annum export oriented refinery in Jamnagar, Gujarat.