US energy major Chevron International?s chances of increasing its shareholding in Reliance Petroleum Ltd (RPL) to 29% have become bleak after Mukesh Ambani-controlled parent Reliance Industries Ltd offloaded 4.01% stake in the company to undisclosed buyers.
Markets on Monday were abuzz with rumours that Chevron, thwarted from raising its stake to 29% from its existing 5%, could exit RPL.
Market observers believe that another 0.99% stake sale in RPL is now in the offing. The combined sale would fetch the promoters over Rs 5,000 crore, which could be used to acquire Chevron?s 5% holding. For Chevron, this would mean earning close to Rs 4,000 crore in just a year.
Last year, Chevron had picked up the 5% stake in RPL at a cost of $300 million, at $1.33 (then Rs 60) a share. As part of the deal, RIL gave Chevron the right to acquire an additional 24% by December 2009. However, with the latest 4.01% sale, RIL?s stake in its refinery arm has come down to 70.99%. It is understood that RIL is unlikely to reduce its holding in RPL to below 51% and, therefore, all that RIL can now offer Chevron is a little less than 20% stake.
Therefore, Chevron can at best increase its stake in RPL to a maximum of 24.99%, which will not give the US energy any strategic rights in the company. The only other option available with Chevron is to access the markets to reach the critical 29% mark.
When contacted, RIL?s spokesperson refused to offer any comments on the RIL-Chevron shareholding issue in RPL. An agency quoted Chevron as saying: ?Chevron continues to evaluate options on its ownership in Reliance Petroleum. We will provide specific project updates when definitive decisions are made.?
While RIL has so far justified the biggest stock market operation (selling 4.01% in RPL at Rs 4,023 crore) as a move to reduce volatility in the stock besides increase the float in RPL, investment analysts like Goldman Sachs felt that the sale could pave the way for Chevron?s exit from the company.
RPL shares hit a high of Rs 295 on November 1 and the stock closed at Rs 209.60 on the National Stock Exchange on Friday. The stock saw a high of Rs 218.50 on the NSE on Monday before it fell to Rs 202.15 and finally closed at Rs 203.65.