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Holcim bid: JSW offers $7 billion; Adani, UltraTech in the race too

ArcelorMittal also ‘evaluating’ bids for ACC and Ambuja

The Group intends to put in $4.5 billion from its own kitty, while the remaining $2.5 billion would be raised from private equity (PE) players, JSW Group chairman and managing director Sajjan Jindal told Financial Times in an interview.
In an interview to Financial Times, Jindal said that the group intends to put in $4.5 billion from its own kitty, while the remaining $2.5 billion would be raised from private equity (PE) players.

The race to acquire Holcim’s India assets – Ambuja Cements and ACC – is set to see a stiff contest between Adani and JSW Group. Speaking for the first time on his interest to acquire Holcim’s India assets, Sajjan Jindal, chairman and managing director of JSW Group, said that the group intends to place a $7-billion bid to acquire a controlling stake.

In an interview to Financial Times, Jindal said that the group intends to put in $4.5 billion from its own kitty, while the remaining $2.5 billion would be raised from private equity (PE) players.

He, however, did not disclose the names of the PE firms, but added that winning a 63% stake in Ambuja would be a “game-changer”.

So far, market sources have indicated that Adani Group has made an offer of more than $10 billion. The Aditya Birla Group, whose UltraTech Cement is currently the market leader, is also understood to be in the race but may require approval from the Competition Commission of India because of its market share in the western region. In case this goes ahead, it may have to shed some of its capacity in this region.

Meanwhile, ArcelorMittal is also reported to have shown interest in Holcim’s assets.

Holcim holds a 63.1% stake in Ambuja Cement and a 4.48% stake in ACC, while Ambuja – Holcim’s flagship entity in India – holds a 50.05% stake in ACC.

Earlier in April, sources close to the development had told FE that JSW Group had assurances for funds of up to $11 billion from lenders and PE firms. They include American PE major Carlyle Group, Advent International and Apollo Private Equity Investment, among others, who had evinced interest to jointly bid for Holcim’s twin assets.

About 7-8 banks and financial institutions had also offered support, they had said.

JSW Group, which has an installed capacity of 16 million tonne per annum (mtpa) as of March end, had plans to increase it to 25 mtpa by FY24. Ambuja Cement has an installed capacity of 31.45 mtpa, with the retail segment contributing to about 80% of its sales. ACC’s production capacity stands at 34.45 mtpa. Together, these companies have a total production capacity of 65.9 mtpa.

If successful, the acquisition would propel JSW as the second-largest cement manufacturer in the country with a total capacity of 81.9 mtpa.

When contacted, a JSW Group spokesperson declined to comment.

According to sources, the deal size for Holcim’s assets in India is currently hovering at about $10 billion, and might go up to $13 billion, depending on the interest from investors.

On its part, Adani Group is understood to be in discussions with global lenders, including Deutsche Bank and Barclays, and domestic banks such as ICICI Bank and Axis Bank for funds.

The name of the bidders, who would get exclusive rights for the financial evaluation, would be announced in a week’s time, sources said.

Even without the acquisition of Holcim’s assets, UltraTech Cement with a production capacity of 120 mtpa would continue to be the leader. For Adani Group, which does not have a presence in the cement sector, this would mean the company foraying into the sector immediately and getting the second slot.

Adani Group was planning to set up a 5 mtpa cement manufacturing facility in Raigad district of Maharashtra, with an estimated investment of Rs 1,000 crore.

India is the second-largest cement producer in the world, accounting for about 8% of global cement production with an estimated production capacity of 550 mtpa.

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