Mumbai: JSW Steel Ltd plans to raise $300-500 million through a sponsored overseas equity issue after merging Southern Iron and Steel Co Ltd (Siscol) with itself, top officials said late on Thursday.
Boards of both companies approved the merger on Thursday.
“The idea is to give more liquidity to the company’s stock,” Sajjan Jindal, vice-chairman and managing director of JSW Steel, said.
The management’s plan to opt for a secondary listing through a sponsored global depository receipts issue would not dilute the equity, Jindal said, but did not give a time frame for the listing.
“With Siscol’s merger, the market cap would be nearly about $4.5-5 billion and is now coming to that size, where it can be listed overseas,” Jindal said.
The listing would give foreign investors a chance to invest in JSW, Director Seshagiri Rao said.
JSW will issue one equity share for every 22 held in Southern Iron and Steel. It will also issue one redeemable preference share for every preference share held in Siscol.
After the merger, the promoters’ holding in the merged entity, which would have a combined capacity of 4.8 million tonnes, would be about 45%, Rao said.
Siscol has a capacity to produce one million tonnes of specialized steel used in forging and auto component industry.
“There is a possibility to expand the capacity to 2 million tonnes, but we are still evaluating because we are concentrating on producing value-added products,” Jindal said.
The company has secured licences for iron ore mining in Karnataka and plans to start soon, Jindal said.
JSW, which has captive iron mining facilities that take care of 30% of its requirement, plans to at least maintain it at the same level when its steel capacity more than doubles to 10 million tonnes by 2010.
“We are hoping that in time we should get to 60%. That is our goal,” Jindal said.
The company, which has secured coal mining rights in Mozambique, is looking at buying overseas iron ore assets.
“If we are not able to bring it (iron ore) to India for using it in our steel plant, we will do hedging,” Jindal said.