Reliance to sell Petroleum stake

Reliance will divest its stake in Reliance Petroleum to partners and multinationals like Shell, Exxon-Mobil

In this story: Infocom ambitions More freedom to list RELATED STORIES, SITES

By Kristie Lu Stout
CNN.com Writer

MUMBAI, India (CNN) -- Reliance, one of India's largest conglomerates, is selling a slice of Reliance Petroleum to finance its telecom and IT expansion plans.

Reliance Industries plans to sell up to a 13 percent stake in its petroleum unit, the nation's largest private-sector oil refiner, according to a report in the Economic Times.

The move follows the release of India's new budget rules that allow Indian companies to make international listings against existing blocks of shares.

Reliance holds about 64 percent of Reliance Petroleum. Selling a 13 percent stake would raise $720 million at the current share price.

The Reliance stake will be divested to several strategic partners, including multinational oil companies such as Shell, Exxon-Mobil and Kuwait Petroleum, according to the Economic Times.

Infocom ambitions

Analysts say a large portion of the cash resources generated from the sell-off will fuel Reliance's ambition to become a telecommunication giant in the world's second most populous nation.

Reliance Infocom is leading the group's IT ventures by laying a broadband network in 115 towns and cities throughout India.

"New players are getting into telecom and Reliance wants their whole footprint in the sand," says one Mumbai-based analyst who asked not be named.

"They plan to get into data centers, and to be stronger in mobile. It's a host of projects that they are talking about in the infocom side," he told CNN.com.

Reliance owns 45 percent of Reliance Infocom, a venture analysts value at between $3 and $6 billion.

More freedom to list

The new Indian budget grants companies like Reliance greater freedom to list shares on overseas exchanges.

"A company like Reliance could not place a block of its investment in the ADR (American Depositary Receipt) market. But now the budget allows it to list," the analyst told CNN.com.

Before, companies were required to issue fresh equity for overseas listings.

A depositary receipt program that will allow Reliance to partially divest its equity stake in Reliance Petroleum will be introduced soon, the Economic Times report said.

The divestment is likely to be completed in six months.

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Reliance Industries

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