US petroleum giant Chevron is poised to buy 21 per cent in Reliance Petroleum for over $6 billion (Rs 24,000 crore).
According to sources, executives of the two companies are in talks on the price, which could be upwards of Rs 250 a share, at roughly a 15 per cent premium on the prevailing market price.
This will be the largest inbound equity investment in the country. Vodafone had paid Hutchison $12 billion to buy it out of Hutch Essar earlier this year, but the payment was made outside India.
Sources said the Chevron deal would be announced soon but Reliance executives were unavailable for comment.
The Reliance Petroleum scrip was up sharply to a high of Rs 295 at the Bombay Stock Exchange on Thursday before closing at Rs 261.85, way above Wednesday's close of Rs 246.30. At this price, Reliance Petroleum has a market capitalisation of a whopping Rs 1,17,832 crore.
Reliance Industries, the parent company, had sold a 5 per cent stake in Reliance Petroleum to Chevron in April 2006 for Rs 1,350 crore with an option to scale up this holding to 29 per cent. Reliance Industries—which had floated Reliance Petroleum in October 2005 to build a second refinery at Jamnagar with a capacity of 27 million tonnes--now holds 75 per cent in its subsidiary against an investment of Rs 6,750 crore.
It is, however, not clear whether Chevron will buy the stake from Reliance Industries or fresh equity issued by Reliance Petroleum. At the time of selling Chevron the 5 per cent stake, Reliance Industries had made it a co-promoter in Reliance Petroleum. So if Chevron buys the 21 per cent stake from Reliance Industries, it will not trigger the mandatory open offer for another 20 per cent holding in Reliance Petroleum. The open offer will, however, be triggered by a fresh equity issuance.