Reliance sets aside $27 billion for acquisitions, gas explorations
Reliance Industries (RIL), India's most valuable firm in terms of market capitalisation and owner of world's third largest refinery, will be setting aside up to $15 billion for making "world-scale" acquisitions in the energy sector besides investing more than $12 billion for development of gas exploration off the country's east coast.
Encouraged by successive years of strong and robust organic growth, Reliance would now change its business strategy "from an organic growth model to a mix of organic and aggressive acquisitions-led mode of growth," RIL chairman Mukesh Ambani said at a petrochemical conference in Dubai.
The company "would be looking at major acquisitions," added Atul Chandra, RIL’s president for the international oil business.
Chandra, who participated at the Reuters India Investment Summit last week, did not specify if RIL would be more interested in acquiring upstream exploration or production assets, or in expanding its core downstream refining and petrochemical activities.
RIL's upstream activities are currently focused mainly on exploration, with its producing assets in Yemen and India.
"All companies look for acquisitions all the time, but I can say that we would look more seriously from this year onward," Chandra said.
"Our growth cannot come only in the organic," Chandra said, adding, "We are always looking at opportunities where we find hidden value. If we do something, it will be world scale. It will be a major acquisition no matter what we do. Such acquisitions could be in excess of $10 billion to $15 billion."
Chandra, however, said he was reluctant to pay up for proven reserves.
"Getting discovered properties is extremely difficult, even if you get that, they hardly leave any value for you. We cannot acquire for the sake of acquiring," he said.
RIL, which is actively pursuing exploration in West Asia, Asia-Pacific and South America, bought a controlling stake in Mauritius-headquartered Gulf Africa Petroleum Corporation (GAPCO), a petroleum distribution company with a significant presence in East Africa in the petroleum downstream sector, becoming the first Indian company to buy petroleum retail assets outside India.
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