Japan's JFE looking to raise stake in JSW Steel
23 August 2011
JFE Steel Corporation of Japan, the world's fifth-largest steel maker, is looking at increasing its stake in JSW Steel once market regulator Securities and Exchange Board of India (SEBI) raises the trigger for open offer to 25 per cent from the current 15 per cent.
JFE currently holds 14.99 per cent equity stake in the Sajjan Jindal-controlled company, just short of the 15 per cent trigger at which the acquirer has to make an open offer for another 20 per cent in the company.
While the cash-starved JSW Steel may be open to JFE raising its holding in the company, the Japanese steel maker will have to wait until the government approves the revised open offer rules proposed by SEBI.
The injection of fresh cash may help the JSW Steel reduce its growing debt, which currently stands near Rs17,000 crore while at the same time allowing JSW to push its new project plans.
Meanwhile, the Japanese Nikkei business daily on Sunday quoted Eiji Hayashida, president of JFE, as saying that the company may think of raising its stake once the laws allow it. In any case, this would not be above 50 per cent, the paper quoted him as saying.
"Under current Indian rules, we cannot boost our stake in JSW without launching a tender offer bid. But should the situation change in the future, we hope to explore the option of raising our stake to above 15 per cent," he said.