JSW Steel eyes expansion through acquisition, seeks partners: report

21 Nov 2017


JSW Steel, which had earlier announced plans to spend up to $1 billion (around Rs6,500 crore) annually on capacity expansion, said it now looking at the acquisition route, possibly with partners in case where larger investments are involved.

Reports quoting JSW Steel's chief financial officer Sehagiri Rao said that with so much of stressed assets on the block, the company is looking at inorganic growth, which is the easier route for capacity expansion.  

The Sajjan Jindal-led company is looking at partners, including foreign investors, to set up a platform for acquisition of stressed assets, including those in Europe, Rao was quoted as saying.

"There are various structures which we are open to exploring and this is one of them,'' Rao told the Mint newspaper in an interview. ''But only when a specific asset is identified and the resolution process is decided thereafter I will be able to give a definite answer," Rao added.

''In my view, if you look at assets available in Europe the capital employed per million tonne is significantly lower that it is otherwise needed in India to pursue opportunities whether organic or inorganic.''

Distressed assets platform involves the incorporation of a separate entity to be used as an investment vehicle to acquire the assets. This may typically involve the investor company and equity partners.

Earlier this year, JSW Steel had said that it was evaluating various opportunities for acquisitions to achieve its target of becoming a 40 million-tonne steel player. The company had also hinted at annual spending of up to $1 billion on both capacity expansion and acquisitions.

A report in Business Standard in August said JSW Steel was in talks with Piramal Enterprises to form a partnership that could result in joint bidding of assets that are currently under the insolvency process.

It was also reported that the company was in talks with investors to acquire Bhushan Steel, which is currently under bankruptcy proceedings.

According to media reports, Piramal Enterprises was to provide the funding while JSW Steel was to manage the assets.

JSW Steel, the flagship company of the $11 billion JSW Group, has operations spread across six locations in Karnataka, Maharashtra and Tamil Nadu.

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