JSW to bid with AION Capital for Monnet Ispat
JSW Steel is joining hands with AION Capital for its Monnet Ispat & Energy bid. Monnet is under insolvency resolution and bidders have been invited to file an expression of interest by Monday. ISHITA AYAN DUTT and ABHINEET KUMAR write
JSW Steel is joining hands with AION Capital for its Monnet Ispat & Energy bid. Monnet is under insolvency resolution and bidders have been invited to file an expression of interest by Monday.
Sources said AION would have a minority stake and provide financial backing. E-mails sent to JSW officials went unanswered and AION didn’t comment.
AION, with $825 million in committed capital, was established in a partnership between ICICI Venture and Apollo Global Management. The sources indicated JSW, controlled by Sajjan Jindal, intends to bid for most of the stressed steel companies going through insolvency proceedings — the others are Essar Steel, Bhushan Steel, Bhushan Power & Steel and Electrosteel Steels. Which is why it wants private equity (PE) players as partners.
JSW is reportedly likely to bid for Bhushan Steel and Bhushan Power & Steel, too. For Bhushan Steel, it is in talks with the Piramal-Bain fund, KKR and JFE Steel Corporation.
JSW had expressed interest in Bhushan Steel and Monnet even before the insolvency process began. When Monnet’s lenders invoked their right to demand strategic debt restructuring, JSW had emerged as the sole bidder in the final round. However, the lenders found the haircut (debt write-off) they would have to take, implicit in JSW’s offer, too steep.
For Bhushan Steel, too, JSW had approached lenders to take on ~20,00022,000 crore of the former’s debt. In FY16, this stood at ~44,478 crore.
However, as JSW now faces competition from other potential investors, it is expected to give better offers for both the companies. The sources indicated JSW would be bidding aggressively for these assets.
The potential investors seem to feel the opportunity thrown up by the insolvency process would be hard to otherwise come by in the near term. Tata Steel also indicated recently that it would look at participating in the process. Other bidders could be ArcelorMittal, Posco and even Vedanta for the stressed assets. PE companies are also expected to bid. Apart from potential investors, the existing promoters, in most cases, are also expected to give their resolution plans.
Among the five steel companies, apart from Monnet, the resolution process for Bhushan Power & Steel has also started, with the resolution professional seeking a plan from prospective investors. The deadline for the latter to give their qualification documents is October 6. Bhushan Power & Steel has annual steel making capacity of three million tonnes, across Odisha, West Bengal, and Chandigarh, and debt of ~37,248 crore.