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UltraTech to raise $1.2 bn for Holcim asset buy

Ultratech has made a non-binding offer to take over Holcim's Brazilian assets

BS ReporterBloomberg Mumbai
The Kumar Mangalam Birla-owned UltraTech Cement is in talks with bank to raise $1.2 billion to fund the takeover of Holcim's Brazilian assets, which the Swiss firm is selling to meet the regulatory requirements for a merger with Lafarge.

UltraTech has made a non-binding offer to take over Holcim's Brazilian assets and the Swiss-based company will soon announce the results of the bids it has received from across the world. Bankers say UltraTech's talks with banks will gain momentum once Holcim announces the results of the sale by December.

While a Birla group spokesperson declined to comment on the fund-raising plan, an insider said the company was raising Rs 150 crore for capital expenditure. UltraTech has raised Rs 500 crore as non-convertible debentures early this month, according to filings with stock exchanges.
 

Birla is not alone in its quest for Holcim's assets, which generate $4.4 billion of sales and has 10,000 people on the rolls. Birla has, however, climbed down from the earlier plan to bid for all assets, which could have cost as much as $9 billion, as analysts raised concern over increased debt burden on UltraTech in the event of bidding for assets.

Apart from the Birlas, Irish cement maker CRH, Cemex and Germany's HeidelbergCement and Brazilian firm Votorantim Cimentos are considering a joint bid for the entire portfolio. The bids can also be made for assets in a particular geography and, hence, over 100 bids are expected from around the world.

At least four marquee private equity firms are also eyeing the entire portfolio, media reports from New York said. Private equity firms BC Partners, Advent and Temasek have teamed up to make a bid. CVC and the Abu Dhabi Investment Authority are the second bidders, while Singapore's GIC, Bain and Onex form the third group and Blackstone, Cinven and Canadian pension fund CPP are the fourth consortium in the race.

If Birla wins the race, it will catapult the group among the top cement makers in the world. The group is one of the largest cement companies in India with 62 million tonnes per annum (mtpa) capacity. Rival Holcim and Lafarge will have a capacity of 57.5 mtpa once the two merge in India.

UltraTech stock closed unchanged at Rs 2,477 a share on Thursday. The stock has gone up by 41 per cent this year compared to a 36 per cent jump in BSE Sensex this year.

CEMENTING POSITION
  • Ultratech has made a non-binding offer to take over Holcim's Brazilian assets
     
  • The company is raising Rs 150 crore for capital expenditure
     
  • It raised Rs 500 crore as NCDs early this month
     
  • If Birla wins the race, it will catapult the group among the top cement makers in the world

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First Published: Nov 28 2014 | 12:50 AM IST

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