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Indian-origin steel tycoon Sanjeev Gupta on US acquisition spree

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LONDON: Britain's Indian-origin steel tycoon Sanjeev Gupta has made a bid to acquire all the assets of a Minnesota iron ore firm, days after he announced plans to take over ArcelorMittal's steelworks in the US.

GFG Alliance, which includes Gupta's global industrial and metals group Liberty House as well as his family's resources and energy group SIMEC, said the move to acquire Mesabi Metallics Company LLC, formerly known as Essar Steel Minnesota LLC and ESML Holding Inc, was part of its plans to step up its North American expansion programme.

The acquisition will cover a seven million tonnes-a-year iron ore pellet plant at Nashwauk Minnesota with an expansion potential to 14 million tonnes a year, plus magnetite resources estimated at 1.968 billion tonnes, with reserves of 1.679 billion tonnes, and hematite mineral resources estimated to be around 352 million tonnes.

The bid is being made as a consortium alongside ERP Iron Ore (ERPI) and institutional investors working together as the Chippewa Capital Partners.

"We are very pleased to team up with our partners in the Chippewa Capital Partners consortium to put forward this exciting proposal. We see this as a time of renewed opportunity for growth of American industry, and we have the breadth and depth of skill and experience to capitalise on that opportunity," said Gupta, executive chairman of GFG Alliance.

He said the bid to acquire Mesabi Metallics fits with the GFG strategy to develop end-to-end integrated and sustainable businesses in North America, encompassing mining and energy production through to recycling, steel making and engineering, underpinned by the group's financial services operation.

Jay Hambro, GFG's Chief Investment Officer and CEO of SIMEC Mining, said, "With current volatility in the iron ore price, it is important to focus on a low cost operation and on value-added products that have a long-term demand base.

"The Mesabi assets need a well-considered built-out programme under the leadership of a group investing with a view to long-term ownership."

The move follows last week's announcement that Liberty House has reached an agreement with NRI steel major Lakshmi N Mittal's ArcelorMittal to buy the Georgetown steelworks in South Carolina with its electric arc furnace and rod mill.

The GFG Alliance is also expanding in Australia where Liberty and SIMEC are at an advanced stage in the process to secure major mining, recycling and steel assets.

GFG's international operations include: recycling, steelmaking and downstream products, power generation, natural resources, and trading business with 2017 revenues in excess of USD 9 billion.

Liberty is the largest producer of steel and downstream engineered steel products in the UK with its products sold in over 50 countries.

Source: timesofindia.indiatimes.com

BHEL commissions 250 Mw coal-based power plant in Assam

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BHEL is executing the main plant package contract for setting up three coal-fired units of 250 MW each at NTPC’s Bongaigaon Thermal Power Station. This is the largest coal-based power plant in North East.

Kolkata: Bharat Heavy Electricals Ltd (BHEL), India's largest power equipment manufacturer, has commissioned a 250 MW coal-based thermal power unit at its Bongaigaon Thermal Power Station (TPS) of NTPC in Assam, the firm said in a statement.

BHEL is executing the main plant package contract for setting up three coal-fired units of 250 MW each at NTPC’s Bongaigaon Thermal Power Station. This is the largest coal-based power plant in North East.

The first unit of the power plant was commissioned earlier by BHEL and is presently operational while the third and final unit is in an advanced stage of commissioning.

The Bongaigaon TPS is located at Salakati near Bongaigaon in Kokrajhar district of Assam. Also known as the gateway to Lower Assam, Bongaigoan is one of the industrial towns of the state, which also has a major petrochemical industry. This project has been set up after demolishing an old 4x60 MW power station of Assam State Electricity Board.

The sets of this rating class, supplied by BHEL, are considered as the workhorse and backbone of the Indian power sector. These sets have been performing much above the national average as well as international benchmarks.

At present, in Assam, BHEL is also executing a gas-based combined cycle power project of 98.4 MW at Namrup. The plant is already commissioned in the open cycle mode and the commissioning in combined cycle mode is in the final stages.

BHEL is the market leader in the Indian Power Sector with a formidable installed base of over 1,70,000 MW of power plant equipment globally.

Source: energy.economictimes.indiatimes.com

First Solar may sell about 200MW of assets in India

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Mumbai: American solar panel maker First Solar is exploring the sale of almost 190-200 megawatts (MW) of its solar power assets in India, two people aware of the development said.

First Solar is a leading global provider of comprehensive photovoltaic (PV) solar systems and has supplied solar panels worth over 17 gigawatts (GW), globally, according to the company’s website.

“First Solar India has been contemplating to monetize its solar power assets of around 190-200 MW and they are in the market, talking to various buyers, both strategic and financial,” said one of the two people cited above, requesting anonymity, as the talks are private.

A sale, if it goes through, could fetch around $200 million, (approximately Rs1,300 crore) in terms of enterprise valuation, he added.

“For First Solar, making solar panels is the main business globally and that is the focus area for them. Hence, they will look to monetize the assets that they build, as and when there is opportunity, given that the strategy is not to hold on to these assets for long periods of time,” said the second person cited above, also requesting anonymity.

A spokesperson for First Solar India declined to comment, stating the company does not comment on market rumours or speculation.

“First Solar continues to evaluate participating in the upcoming solar capacity auctions both at the central and state level to create utility scale PV assets using a combination of its strong balance sheet and its proven CdTe thin film module technology that has demonstrated a yield advantage of 6-9% over poly crystalline silicon module technologies in Indian conditions. India is one of the company’s key global markets, where we would continue to leverage upon our incumbent position to create further growth,” the spokesperson said in an email response.

First Solar India has a total portfolio of around 260 MW, located in Andhra Pradesh and Telangana. In India, the solar panel maker has supplied over 1GW worth of panels.

As part of its strategy, First Solar has developed and sold solar power assets in other geographies. According to the company’s website, in August it sold 11 MW solar plant in California, to D.E. Shaw Renewable Investments Llc.

Merger and acquisition (M&A) activity has been rising in the Indian renewable energy sector.

Earlier this month, renewable energy firm Inox Renewables Ltd said it had agreed to sell its operating wind power farms of 260 MW capacity to Chennai-based wind power company Leap Green Energy Pvt. Ltd.

Last month, renewable energy firm Orient Green Power Co. Ltd said that it was evaluating a merger of its wind power business with IL&FS Wind Energy. The merger of the wind assets of the two firms will create a company with 1.2 GW assets.

On 14 March, Mint reported that Greenko Group is looking to acquire hydro and wind power producer Bhoruka Power Corp. Ltd’s renewable energy portfolio of 310 MW.

In 2016, the sector had witnessed major M&A transactions such as Tata Power’s renewable arm acquiring Welspun’s 1.1 GW of renewable assets worth $1.4 billion and Greenko acquiring SunEdison’s India portfolio.

Source: livemint.com

M&A Conference and Investors Meet 2017 in Mumbai

TMC, CPI(M) oppose sale of PSUs

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NEW DELHI: TMC and CPI(M) today opposed the sale of India's first pharma company Bengal Chemicals and Pharmaceuticals Ltd and Alloy Steel Ltd, saying it will lead to job losses.

Amid slogan shouting by Congress over the issue of conduct of the Goa Governor in inviting BJP to form government after reportedly holding consultations with Finance Minister Arun Jaitley, Sukhendu Sekhar Roy (TMC) raised the issue of proposed sale of BCPL while Ritabrata Banerjee (CPI-M) opposed sale of Alloy Steel.

Roy said BCPL was set up in April 1901 and was the only unit to manufacture anti-venom serum. It made a profit of Rs 1 crore last year and any strategic sale will lead to loss of jobs of thousands of workers. He asked government to review its decision.

Banerjee raised the issue of planned outright sale of state-owned SAIL's three special steel units, including Alloy Steel Plant.

He sought stoppage of the strategic disinvestment of Alloy Steel saying it would lead to job losses and add to the industrial distress in Durgapur where several industrial units have closed down.

Source: economictimes.indiatimes.com

GOI Validates Strategic Divestment Route to Unburden Losses – SAIL to Sell 3 Steel Plants

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As we write and speak of steel slowdown, protection measures for the steel industry and of consolidations, Mergers & Acquisitions to cut losses, the GOI has announced strategic divestment of 3 steel plants of the Maharatna PSU SAIL. The government has approved sale of state-owned SAIL’s 3 special steel units viz Alloy Steels Plant (ASP), Salem Steel Plant (SSP) and Visvesvaraya Iron and Steel Plant (VISP).

The move underpins SAIL’s need for strategic divestment to cut losses. The government has budgeted to raise INR 15,000 crore from strategic disinvestment in 2017-18. The sale of these three units is likely to happen only in the next financial year beginning April.

In the run-up to the sale, SAIL has sought for advisors for transaction from professional consulting firms, investment bankers and financial institutions to provide advisory services and manage the disinvestment process.

“The government of India has ‘in-principle’ decided for strategic disinvestment of ASP, SSP and VISP of Steel Authority of India Ltd with transfer of management control,” SAIL said in the request for proposal (RFP) for appointing advisors.

The role of the transaction advisor will be crucial to the sale. The advisory firm will chart out the modalities of the disinvestment process of the three steel plants and prepare a detailed operational scheme to successfully implement the process, indicating tentative timelines for each activity.

Whether the sale will be carried out via bidding or auction will be decided by the advisory firm. The valuation of the plants will be carried out and the advisor will help SAIL in fixing the range of the fair reserve price thereafter. The reserve price will be based on valuation methods like discounted cash flow, relative valuation, and asset based valuation.

The government’s decision to divest the largest steel PSU comes at a time when steel industry losses are heavy and steelmakers are looking for various fund raising routes. Strategic divestment of an asset is one of such routes. Meanwhile, debt financing, equity based fund infusion are other routes to raise funds.

Source: events.steelmintgroup.com

M&A in Steel Sector

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Steel Industry in India, one of the fastest growing steel producing nations, is experiencing “stress” for some time due to rising imports, higher input costs and subdued demand. The big players with annual production capacity of a million plus tonne have not been affected much; it is the mid and smaller size manufacturers who have been hit worst. As on September 2016, the steel industry’s total exposure to banks stood at INR 3.1 trillion of which, INR 1.5 trillion is stressed out, INR 1.15 trillion out of that has been declared as NPA.

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Big and established players like Monnet Ispat and Uttam Galva are already in advanced negotiations for possible takeover by cash rich funds and by companies which find the present scenario opportune for consolidation. The mid size and small time players are still in a fix whether to stay put or to exit. If they decided to stay put, they will have to deal with the pressing issue of debt servicing in depressed market conditions, and if they decided to ship out they will have to moderate their expectations far below the actual market price.

Year 2016 ushered in a ray of hope to these ailing industry players. As per a Thompson Reuters report, the deal value of Mergers & Acquisitions (M&A) in India in 2016 touched a figure of USD 72.4 billion, which is the highest ever achieved since 2006 beating the previous best of USD 67 billion achieved in 2007. The 2016 value is up by 97.2% in comparison to 2015 value. The materials sector (iron & steel sector is a part of which) saw a jump of 268%, valued at USD 9.2 billion in 2016 as against USD 2.5 billion in 2015.

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Improving demands of steel coupled with budgetary thrust on housing, infrastructure, railways and defence sector is likely to make this sector more attractive and revive domestic steel demand. Changes expected from GST which is likely to be rolled out by July 2017, will have a significant impact on the viability and prospects businesses in the steel sector.

 

Source: events.steelmintgroup.com

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