Reliance defends Aramco exec’s appointment to company board
Firm denies any link between appointment and talks to sell stake in business
MUMBAI: Reliance Industries Ltd (RIL) on Wednesday defended the appointment of Saudi Aramco chairman Yasir Al-Rumayyan as an independent director after two of the Indian conglomerate’s institutional investors said they would oppose the move.
The Mukesh Ambani-led Reliance denied any link between Al-Rumayyan’s appointment and its ongoing talks to sell a stake in its oil-to-chemicals (O2C) business to the Saudi oil giant.
California State Teachers Retirement Fund and State Board of Administration of Florida decided to vote against the proposal, following recommendations from proxy adviser Glass, Lewis and Co., which had red-flagged the board appointment because of potential conflict of interest.
Al-Rumayyan is also governor of Public Investment Fund, Saudi Arabia’s sovereign wealth fund, and serves on the boards of ride-hailing company Uber Technologies Inc. and cellphone chip designer ARM Ltd.
“The appointment of H.E. Yasir Al-Rumayyan has no connection with the contemplated transaction with Saudi Aramco,” Reliance said in an exchange filing.
“Further, as approved by the shareholders, the O2C business of Reliance is being spun off into a subsidiary, and as per the terms of the proposed transaction, Saudi Aramco will participate in the equity of the O2C subsidiary. The O2C arm board may have nominees of Saudi Aramco to protect its interest.”
Reliance named Al-Rumayyan as an independent director for a term of three years. Ambani had in August 2019 announced talks for the sale of a 20% stake in the O2C business, comprising its oil refineries at Jamnagar in Gujarat and petrochemical assets, to the world’s largest oil company. The deal was to conclude by March 2020 but has been delayed for reasons not disclosed by either company.
A recent report in Financial Times said Aramco is weighing paying for the stake with its shares initially, and then staggered cash payments over several years. The report said the proportion of shares versus cash was still up for debate. Analysts have said Aramco’s stake purchase in Reliance’s O2C business would further strengthen the Indian company, which had raised ₹3.24 trillion in capital from stake sales in its units, a rights issue and asset sales last year.