Construction Industry News
The battle to buy a majority stake in Holcim Group's cement businesses in India has become fierce, with the JSW Group lining up numerous private equity firms and lenders to help fund the transaction. The decision comes after the Adani Group, led by billionaire Gautam Adani, reached a similar agreement with several international lenders.
According to media sources, JSW Group has received funding commitments of up to $11 billion from private equity firms and lenders. Carlyle Group, Advent International, Apollo Private Equity Investment and others had expressed interest in bidding in a combined bid for Holcim's twin homes, Ambuja Cements and ACC.
Media sources revealed that many Indian and global lenders have offered assistance in the form of loans when needed.
About five major private equity firms have expressed interest in the purchase, and commitments from 78 banks and other institutions are also on the table.
Many teams of the bidders have already arrived in Zurich, awaiting the submission of the final outlines of the proposal.
The bid is now valued at around $10 billion, but with so many contenders in the mix, it could potentially reach $13 billion.
Ambuja Cements has an installed capacity of 31.45 million tons per year (mtpa), with the retail segment accounting for more than 80% of sales.
ACC, for its part, has a cement production capacity of 34.45 million tons per year, bringing the total production capacity of these companies to 65.9 million tons per year.
JSW Group planned to increase its installed capacity to 25 million tons per year by FY24, from 16 million tons per year at the end of March. If the deal goes through, the group will become the country's second largest cement producer, with a total capacity of 81.9 million tons per year.
The same goes for the Adani Group, which does not own a cement business but is reportedly investigating it.
Holcim owns 63.1% of Ambuja Cements and 4.48% of ACC, while Ambuja, Holcim's flagship in India, owns 50.05% of ACC.
Ambuja Cements has a market cap of Rs 76,159.42 crore while ACC has a market cap of Rs 44,672.71 crore. The combined market capitalization of the two companies is Rs 1.21 trillion. If signed, it would be one of the largest in the country.
With a production capacity of 550 million tons per year, India is the world's second largest cement producer, accounting for about 8% of global cement production.
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