Mukesh: The show begins

Mumbai, April 3: Reliance Petroleum Ltd, a Mukesh Ambani group company, today completed a pre-IPO private placement to a clutch of investors for Rs 2,700 crore. The company is set to come out with an initial public offering (IPO) later this month.

The private placement came at a price of Rs 60 per share. Though Reliance Petroleum officials did not reveal the participants’ names, the foreign investors are believed to include Deutsche Bank, Citigroup and UBS. The State Bank of India and Life Insurance Corporation figure on the list of domestic investors.

The lock-in period for these shares will be one year from the date of allotment, the officials said. After this placement, the IPO size has been revised to 135 crore shares from 180 crore earlier. Of this, RIL will buy 90 crore shares at the higher end of the price band one day before the issue opens. Forty-five crore shares will be offered to the public.

In its draft red herring prospectus filed with the Securities and Exchange Board of India (Sebi), Reliance Petroleum had indicated its pre-IPO private placement plans. According to analysts, the private placement would enable the company to establish a benchmark.

The private placement comes at a time when reports say international oil companies likes Chevron Corporation, Exxon Mobil and China Petroleum are angling for a minority stake in RPL.

RIL today said several international players have approached it for a strategic tie-up in Reliance Petroleum. “RIL has been in talks with them, but no decision has been reached. These discussions cover several proposals, including technical support tie-ups, supply of crude/raw material and purchase of finished goods,” the company said in a notice issued to stock exchanges.

Some industry biggies have also shown interest in picking up a minor stake in Reliance Petroleum either through a fresh issue of shares by the company or through sale of part of the shares held by RIL.

“All these proposals are being discussed. If and when a decision is reached, necessary disclosures will be made and regulators’ approvals sought if required,” the company said.

Reliance Petroleum’s 29-million-tonne-per-annum refinery, located in the Jamnagar (Gujarat) special economic zone, will come at a project cost of Rs 27,000 crore. This is proposed to be funded through a debt component of Rs 15,750 crore and an equity of Rs 11,250 crore, including proceeds from the IPO. With the commissioning of this unit in August 2008, the refining capacity in Jamnagar will go up to 62 million tonnes.