Tata Steel appoints i-banks for $2 billion rights issue
MUMBAI: Tata Steel Ltd has appointed a bunch of domestic investment banks to manage its proposed rights issue of about $2 billion (₹12,800 crore), three people aware of the development said. On December 19, the steel maker’s board had approved a plan to raise up to ₹12,800 crore by selling .
“Tata Steel has appointed domestic investment banks Axis Capital, ICICI Securities, Kotak Mahindra Capital and SBI Capital Markets Ltd to manage the $2 billion rights issue,” said one of the three people cited above, requesting anonymity, as he is not authorised to speak to reporters.
According to the second person, the company is looking to launch the deal in the coming quarter, as early as January. He too requested anonymity.
“They are moving fast on the transaction and are targeting to raise the funds in the next quarter. The deal could be launched as early as before end of January. Usually all Tata deals are underwritten by the bankers and that could be one of the reasons for the company wanting to work with these merchant bankers as they are all backed by respective group banks,” he said.
Emails sent to Axis Capital, ICICI Securities, Kotak Mahindra Capital and SBI Capital Mar- kets Ltd were not answered.
“The Tata Steel Board reviews the company’s financing strategy from time to time as part of its overall growth strategy. In keeping with the strategic decisions being implemented with respect to its future growth strategy, the company also implements various long term financing plans. The company also engages with its lenders and investors to evaluate financing and refinancing transactions in line with business requirements,” Tata Steel said in an email response.
The approval to the rights issue by the board is part of the financing strategy to de-leverage and for general corporate purposes, the email added.
“For the purpose of the issue, the Board authorised the Executive Committee of the Board to decide the structure, terms and conditions of the issue including the instrument options, rights entitlement ratio, issue price, record date, timing of issue and other related matters. The company will make appropriate disclosures regarding this at an appropriate time,” it added.
As of September 30, Tata Steel’s gross debt stood at ₹90,259 crore.
In its December 19 board meeting, the company also approved an expansion of 5 million tonnes per annum (Mtpa) for its Kalinganagar plant, which currently has a capacity of 13Mtpa.