In a fresh round of share sales from its treasury, India’s largest private firm, Reliance Industries Ltd (RIL) controlled by billionaire Mukesh Ambani, signalled on Monday that it is strengthening a war chest to buy bankrupt Netherlands-based petrochemicals firm, LyondellBasell.
The company has raised a total of about $2 billion (Rs 9,328 crore) from stock sales in the past four months by a separate trust controlled by the promoters.
Monday’s round of sales fetched RIL Rs 3,465 crore ($763 million).
“Petroleum Trust sold 330 lakh equity shares of the Company on January 11, 2010,” said a statement by the company to the stock exchanges. “The Trust will realize approximately Rs.3,465 crore, at a price of Rs. 1050 per share.”
The latest stock sale by Reliance to some foreign funds at a 4.7 per cent discount is also the biggest of the three equity sales by the company. The Petroleum Trust of Reliance holds the treasury shares sold.
The latest deal was managed by UBS Securities and followed a Rs 2,675 crore ($577 million) share sale by RIL last week to state-run Life Insurance Corp of India and a Rs 3,188 crore ($660 million) share sale in September 2009 to undisclosed foreign funds.
The deals are seen as part of Reliance's bid to take control of Luxembourg-based LyondellBasell. While the official spokesperson of RIL declined to comment, sources close to the company confirmed that the fund raising was related to its acquisition plans for LyondellBasell.
“I do not see any other reason than the planned acquisition of LyondellBasell that the company would sell its treasury shares and built cash,” said Divyesh Shah, chief executive officer, Indiabulls Securities.
Last week, Reliance had sweetened its offer to buy a controlling stake in LyondellBasell that valued the Dutch company at $13.5 billion (Rs 61,830 crore) compared to its earlier bid of $12 billion (Rs 54,960 crore) made last November.
But a Wall Street Journal report had said that Lyondellbasell’s board had rejected Reliance's sweetened offer.
Acquiring LyondellBasell would also give Reliance a leg-up in its efforts to gain greater access to the U.S. and European markets. Its bid comes as petrochemical and refining asset prices have fallen globally in the wake of the financial crisis making it potentially a good time to buy assets cheap.