Jindal Steel in talks to raise ₹15,000 crore
MUMBAI: Jindal Steel and Power Ltd (JSPL) is in the process of raising ₹15,000 crore from a clutch of banks led by State Bank of India (SBI), three people aware of the development said, in one of the largest corporate loan agreements in recent times.
Jindal Steel Odisha Ltd, a wholly owned unit of Naveen Jindal-promoted JSPL, is raising the long-term loan, the people said on condition of anonymity. The loan will help it partly finance the ₹22,500 crore capacity expansion at Angul in Odisha, with parent JSPL bringing in the rest as equity. JSPL will also provide a corporate guarantee for the loan.
JSPL is one of India’s largest steelmakers, with interests in steel, power, mining and infrastructure.
“SBI, the lead lender, has already underwritten the entire loan and is now in the process of downselling it to other lenders,” one of the three people cited above said, adding that India’s largest lender plans to retain ₹5,000 crore on its books. He said several banks, including some of the largest public sector banks, have evinced interest and are reviewing the loan proposal.
The JSPL loan would be even bigger than a recent loan to the Adani Group. Mint reported in April that SBI’s nod to lend ₹12,770 crore to Adani Enterprises’ arm Navi Mumbai International Airport Pvt. Ltd has generated a lot of interest among rival banks, with a group of five lenders willing to jointly take over a majority of the loan.
“This (Odisha) expansion programme will be funded by a judicious mix of internal accruals and long-term borrowings. The debt facility agreement has already been signed with State Bank of India for securing financing for the project,” a JSPL spokesperson confirmed in an email.
An email sent to SBI remained unanswered till press time.
The second person cited above said lending to projects where the parent acts as a corporate guarantor gives the bank some additional comfort and makes it seem a relatively less risky bet. That apart, lenders also rely on SBI’s project finance assessment capabilities and are known to be eager to take part in a loan consortia underwritten by the state-owned bank. “Several large companies are setting up subsidiaries for new projects or even for expansion of existing ones. This is helping them save on taxes under the new regulations and banks are also happy to lend since there is a corporate guarantee from the parent,” the person said. Jindal Steel Odisha was set up in April 2021.