The Sandur Manganese & Iron Ores (SMIORE) has signed an agreement with Asia-focused private equity firm ADV Partners to acquire Arjas Steel, a special steel manufacturer, for an enterprise value of ₹3,000 crore.
According to the share purchase agreement, SMIORE will acquire about 81% stake in Arjas Steel through a cash deal. The equity value will be decided based on customary and pre-agreed adjustments to the enterprise value at the closing date, it said in a regulatory update.
Following the deal, BAG Holdings – an entity owned by Bahirji A Ghorpade, a promoter of SMIORE – will acquire about 19.12% stake in Arjas Steel. The deal is subject to be completed within seven months, following regulatory approvals.
The move, which marks SMIORE’s foray into manufacturing of special steels and value-added products, also paves way for ADV Partners’ exit from Arjas Steel.
“This acquisition not only unlocks numerous synergies but also represents a forward integration for SMIORE. The acquisition will take us another step closer to our strategic transition from a merchant miner to an integrated commodity producer,” SMIORE MD Bahirji A Ghorpade said.
Arjas, a supplier of steel to the automobiles sector, operates two plants – a steel plant in Tadipatri, Andhra Pradesh, and an electric arc furnace-based steel plant in Mandi Gobindgarh, Punjab – with a total production capacity of 500,000 MT. The company has an employee strength of 2,500.
Arjas had posted a turnover of ₹2,876 crore in FY23, up from ₹2,368 crore posted in FY22 and ₹1,561 crore in FY21.
ADV Partners, an independent Asian regional private equity manager, has more than $1.2 billion in total assets under management. The firm’s investments in the manufacturing segment include Arjas Steel, Amber Enterprises, Tarsons, Micro Plastics in India and the SQ Group of Bangladesh.