The Reliance petrochemical plant in Jamnagar
If the deal with Aramco gets through, this would make the second mega transaction in India since the Walmart acquisition of Flipkart, the online retailer. Pictured here is Reliance's petrochemical plant in Jamnagar. Image Credit: Bloomberg

London (Bloomberg): Reliance Industries Ltd.’s talks to sell a minority stake in its oil-to-chemical division to Saudi Aramco have been gathering pace in recent weeks. Aramco officials and bankers on the deal have been working at Reliance’s offices in Mumbai for due diligence this month.

Both parties are trying to overcome differences over the deal’s structure, which had stalled the process last year, Bloomberg News previously reported. Indian billionaire Mukesh Ambani’s Reliance is keen to sign a binding agreement before the next annual shareholders meeting, which is due to take place before the end of September.

Reliance in August valued its oil-to-chemicals division at $75 billion including debt, implying a $15 billion valuation for the 20 per cent stake. If the deal closes at this value, it will be the largest transaction in India since Walmart Inc.’s $16 billion acquisition of a majority stake in Flipkart Online Services Pvt.

For Aramco, the deal could be its biggest since agreeing to buy a majority stake in Saudi Basic Chemicals for $69 billion last year.

Some delays

Ambani in August told shareholders that Reliance and Aramco had agreed to a non-binding deal for a 20 per cent stake in the oil-to-chemical operations. But in December, the Indian government requested a court to stop the proposed sale to help ensure the Mumbai-based company has enough assets to pay arbitration claims in an unrelated case.

A month later, Reliance’s joint chief financial officer V. Srikanth told reporters that the transaction isn’t expected to be completed by March.

Selling off

Reliance has been selling assets from mobile-phone towers to a 49 per cent stake in its fuel retail business to reduce leverage that’s risen over the past few years as it poured money into new sectors such as telecommunications. The Indian conglomerate’s debt stood at $43 billion at the end of December, according to its latest earnings statement.