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  1. Foreign players, private equity funds, local firms to vie for Lafarge India assets

Foreign players, private equity funds, local firms to vie for Lafarge India assets

A host of foreign cement companies, private equity funds and domestic players are in the race to acquire Lafarge’s cement assets in India and have submitted expressions of interest (EoI) for the forthcoming sale. According sources, the list of likely bidders include the Brazilian cement giant Votorantim Group, CRH, Heidelberg Cement, private equity funds KKR and Blackstone and domestic players like JSW and the Piramal Group. Sources familiar with the development said that bidding for the 10.75 million tonne of assets will start in a month’s time and Arpwood Capital, founded by former Carlyle and TPG India executives Rajeev Gupta and Amol Jain, have been retained as advisers by Lafarge for the transaction.

By: | Published: March 8, 2016 2:21 AM
Cement stocks, Ambuja Cement, Ultratech cement, shree cement, budget 2016 Industry experts maintain that the forthcoming sale could see aggressive bidding given the growing interest in the Indian cement industry, which has a current production capacity of 287 mtpa but is growing at a rate of 8% per annum. (Reuters)

A host of foreign cement companies, private equity funds and domestic players are in the race to acquire Lafarge’s cement assets in India and have submitted expressions of interest (EoI) for the forthcoming sale. According sources, the list of likely bidders include the Brazilian cement giant Votorantim Group, CRH, Heidelberg Cement, private equity funds KKR and Blackstone and domestic players like JSW and the Piramal Group. Sources familiar with the development said that bidding for the 10.75 million tonne of assets will start in a month’s time and Arpwood Capital, founded by former Carlyle and TPG India executives Rajeev Gupta and Amol Jain, have been retained as advisers by Lafarge for the transaction.

Last year, Lafarge was directed by the Competition Commission of India (CCI) to divest a part of its cement assets over antitrust concerns following its global merger with Swiss cement giant Holcim in April 2014. The CCI’s concern stemmed from the fact that Lafarge and Holcim together enjoyed a dominant position in several markets in India with total capacity of 68 mt per annum. While Lafarge has a large presence in eastern India, Holcim through its subsidiaries ACC and Ambuja Cement has a presence in almost all the key markets in India.

In August 2015, Lafarge received conditional clearance from CCI to sell its Jojobera and Sonadih plants in eastern India to Birla Corporation for an estimated Rs 5,500 crore. However, the deal did not go through due to regulatory issues pertaining to transfer of limestone mining rights, following which Lafarge submitted a revised proposal to sell its entire cement assets here.

Industry experts maintain that the forthcoming sale could see aggressive bidding given the growing interest in the Indian cement industry, which has a current production capacity of 287 mtpa but is growing at a rate of 8% per annum. Sources say that the while some of the bidders include those who had bid earlier for Lafarge’s eastern India assets but competition will be likely higher given new entrants like Votorantim Group (one of the largest industrial conglomerates in Latin America), Piramal Group and KKR. Private equity fund Blackstone, which earlier this year narrowly lost out to Birla Corporation to buy Reliance Infra’s cement business, is also expected to bid aggressively. Buyout fund KKR, which recently part-exited its five-year-old investment in Dalmia Cement at almost double the value, is also keen for a greater cement play in India, sources said. Both KKR and Blackstone were also in race to acquire the Jaypee Group’s cement business, which is now being sold to the Aditya Birla Group’s UltraTech. Foreign players like Heidelberg and Irish cement maker CRH, which already have a presence in India, are also understood to be keen on acquiring new assets to ramp up capacity.

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