BanyanTree Finance to back Mideast Integrated Steels for Electrosteel Steels bid
Mumbai: Private equity firm BanyanTree Finance Pvt. Ltd has joined the race for Electrosteel Steels Ltd which is currently in bankruptcy courts, two people aware of the development said.
Banyan Tree will back Mideast Integrated Steels Ltd (MISL), part of Odisha-based Mesco Steel group, for the Electrosteel bid, the first of the two people said on condition of anonymity. MISL has submitted an expression of interest with the insolvency professional named by the National Company Law Tribunal (NCLT).
Mesco is among six bidders for Electrosteel’s assets. Others include Tata Steel Ltd, Dalmia Bharat Ltd, Electrosteel Castings Ltd, Srei Infrastructure Finance Ltd and Edelweiss ARC, the second person cited above said.
BanyanTree Finance is the local adviser to BanyanTree Growth Capital, which manages assets of $300 million across two private equity funds. In 2015, Banyan Tree Bank Ltd, Mauritius, the sister concern of BanyanTree Finance, had made a Rs40 crore debt investment in MISL—one of the largest integrated steel manufacturing companies in India.
Electrosteel Steels owes Rs10,274 crore to a consortium of banks led by State Bank of India (SBI).
“It is true that we are bidding for Electrosteel Steels Ltd and our financial adviser is Banyan Tree Capital Advisors,” said Rita Singh, chairperson and managing director, MISL. However, the debt and equity structure are still being worked upon, she said. Therefore, the company is not in a position to give further details now, she added. An Electrosteel spokesman confirmed that about six expressions of interest have been submitted without disclosing details.
“It is a policy of the bank not to comment upon individual accounts and its treatment,” said an SBI spokesperson.
“Tata Steel would not like to respond to market speculations. As a company, we are always open to evaluating various options that could create shareholder value,” said a Tata Steel spokesperson. A Dalmia Bharat spokesperson declined to comment, while mails sent to Srei Infra and Edelweiss ARC did not elicit any response.
BanyanTree Finance has invested in companies such as Pune-based ethnic foods maker Nilon’s Enterprises Pvt Ltd, coaching services provider MT Educare, infrastructure firm Dilip Buildcon Ltd, Gujarat-based electric motor maker Rotomag Motors and Controls Pvt. Ltd, Hyderabad-based power infrastructure service provider Power Mech Projects Ltd, and Bengaluru-based renewable power producer Atria Power Corp. Ltd.
The promoter company Electrosteel Castings Ltd holds about 45.23% stake in Electrosteel Steels Ltd, out of which 80% stake is pledged with lenders. Electrosteel Steels is one among the 12 stressed accounts that the Reserve Bank of India (RBI) asked lenders to refer for bankruptcy proceedings.
In June, SBI and other lenders have moved insolvency proceedings against Electrosteel Steels at the NCLT under the Insolvency and Bankruptcy Code, 2016.
In fiscal year 2017, Electrosteel Steels’ loss jumped to Rs1,463.48 crore from Rs368 crore in the previous year. Its revenue slipped marginally to Rs2,867.82 crore from Rs2,904.47 crore in the previous year. In FY17, the company’s finance cost alone was Rs1,129.83 crore compared with Rs526.63 crore in the previous year, according to a July report in Mint.
Founded in 2006, Electrosteel Steels has set up a 2.5 million ton per annum greenfield integrated steel plant in the Bokaro district of Jharkhand.
The company went public in September 2010. At that time, UK-based steel trading firm Stemcor Global Holdings Ltd had a substantial stake in the company.
Incorporated in 1992 with assets in coastal Odisha, MISL currently operates an iron ore mine and a pig iron plant in Odisha. MISL currently operates two 389 cubic meter blast furnaces at its plant at Kalinga Nagar, Odisha. MISL’s main products are iron ore fines, calibrated lump ore and pig iron. MISL is planning a major expansion at its plant, which will take the finished steel capacity to 3.5 million tonnes in two phases, according to its website.
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